The Customs, Excise And Service Tax Appellate Tribunal Chennai, ruled that in works contract services, as cost of materials also form part of the contract, the benefit of abatement has to be extended to an assessee.
Facts
The appellant had provided taxable services under the category of ‘Works Contract Services’ to PWD, Local bodies etc. These services involved construction of buildings for school, colleges, Court building, office buildings, hospital etc.
The appellant had not obtained service tax registration and had not filed ST-3 returns. The appellant had entered into contracts with the Government Department and other local bodies for construction of buildings after 01.03.2015, executed works and collected the amount for the works executed. They failed to discharge the service tax on the consideration received. Investigation was initiated. Documents were verified and statements were recorded.
On scrutiny and analysis of documents and statements it was seen that the appellant has not discharged their Service Tax liability under works contract services. Show Cause Notice was issued to the appellant proposing to demand Service tax along with interest and for imposing penalties.
Submissions
Advocate S. Durairaj appearring for the appellant submitted that the Department has classified the service under works contract services; the valuation of works contract service has to be done under Section 67 read with Rule 2A of the Service Tax (Determination of Value) Rules, 2006. However, it is submitted that in the instant case, the adjudicating authority had confirmed the tax liability of Rs.4,84,79,036/- on the value of Rs 32,94,21,693/-, which is inclusive of value of goods for the reason that the appellants had not furnished the relevant details.
Rudra Pratap Singh, Authorized Representative, submitted by him that the appellant had sufficient opportunity to furnish evidence and also to reply to the Show Cause Notice and therefore, the documents produced belatedly cannot be accepted or relied.
Decision
The division bench of Sulekha Beevi C.S., Member (Judicial) And Vasa Seshagiri Rao, Member (Technical) said that in works contract services, as cost of materials also form part of the contract, the benefit of abatement has to be extended to an assessee.
The bench observed that in case of works contract services rendered to Government authorities, the amount is paid to the contractor on the basis of work completion as recorded in the Measurement Book (M-book) which is maintained by the departments.
The bench opined that the appellant has to be given an opportunity to put their defence on the basis of the documents furnished by them.
Case title: M/s. Sivaparameshwari Engineering Construction & Co v/s The Commissioner of GST & Central Excise
Citation: Service Tax Appeal No. 40467 of 2022
