SANJAY ELECTRICAL Vs. COMMISSIONER OF SERVICE TAX, NOIDA

JUDGEMENT

(1.) ADJUDICATION order dated 29 -8 -2012 confirms a composite service tax demand of Rs. 50,27,977/ - besides interest and penalty as specified therein on the ground that petitioner provided four categories of taxable services including (i) commercial or industrial construction service, the tax liability for which is assessed as Rs. 68,500/ -; (ii) construction of residential complex service, which is assessed to Rs. 3,63,742/ -. At the present stage of the proceedings, ld. Counsel for the petitioner/appellant, Shri A.K. Batra does not contest the classification of these services nor the quantum of tax liability assessed as relatable to these services. It is however submitted by the ld. Counsel that the petitioner has remitted Rs. 3,97,273/ - plus the applicable interest thereon in respect of these services. The total assessed tax liability on these two services is Rs. 4,34,272/ -. The balance tax liability on these two services viz. commercial or industrial construction service and construction of residential complex service is thus Rs. 35,000/ - (approx.). In respect of erection, commissioning and installation services, the petitioner urged several contentions including that all the petitioner's activities alleged and classified by Revenue to constitute erection, commissioning and installation service were provided under composite contracts involving rendition of service and deemed sale of goods as well and therefore ought to be classified as works contract service and are classifiable under Section 65(105)(zzzzh) of the Finance Act, 1994. The tax liability assessed on erection, commissioning and installation, is Rs. 26,01,012/ -. Prima facie, since the period in dispute is 1 -4 -2010 to 31 -3 -2011, subsequent to introduction of works contract service, which is an independent taxable service and undisputedly the services provided by the petitioner are under composite contracts involving rendition of service and deemed transfer of the goods during the course of executing the works, these should prima facie be classified as work contract. The petitioner's claim for execution of the value of the goods incorporated, claimed to be to the extent of 90% of the gross consideration received was not accepted on the ground that no proof was furnished regarding the value of goods or deemed to have been sold during the course of rendering the service. The Commissioner granted the benefit of abatement of 67% only under Notification No. 1/2006 -S.T.

(2.) PRIMA facie, since we consider that the service falls within the ambit of works contract service, an independent taxable service, introduced w.e.f. 1 -6 -2007 and is required to be classified only as works contract service, in view of the classification discipline mandated by Section 65A of the Act, the amount of Rs. 26,01,012/ - being the tax liability assessed on Erection, Commissioning and Installation service is unsustainable.

(3.) WE therefore grant waiver of pre -deposit and stay all further proceedings pursuant to the adjudication order dated 29 -8 -2012 passed by the Commissioner, Customs & Service Tax, Noida on condition that the petitioner remits Rs. 12,42,000/ - (comprising Rs. 1,27,000/ - on management, maintenance or repair service and Rs. 35,000/ - towards the balance liability on commercial or industrial and residential complex services) plus the proportionate interest hereon, within six weeks and report compliance by 11 -3 -2014. In default the stay shall stand dissolved and appeal shall stand dismissed for failure of pre -deposit. The ld. counsel for the petitioner is present in the court and undertakes to intimate to the petitioner its obligations under this order. The stay application is disposed of as above.