ST - Applicant has entered into separate agreements with MEPL, one for supply of materials and another for erection on which they paid ST - since supply of material is under separate agreement and on which VAT has been paid, applicant has prima facie strong case - Stay granted: CESTAT
By TIOL News Service
MUMBAI, NOV 21, 2013: THE Service Tax amount involved in this Stay application is Rs.28,49,55,027/- and is on four different counts.
Before the CESTAT the applicant submits thus -
1. Service Tax demands of Rs.14,47,87,988/- and Rs.7,83,15,585/- respectively have been confirmed by the CCE, Nagpur on the ground that applicant had undertaken the activity of erection, commissioning and installation service.
1.1 It is the contention of the applicant that they have entered into two separate contracts with the Maharashtra Enviro Power Limited and other Electricity Boards for supply of material as well as for erection, commissioning and installation; that they had already paid appropriate service tax on erection and commissioning activity and in respect of the supply of material under the separate contract the applicant had paid appropriate VAT/Sales tax.
1.2 However, the adjudicating authority held that applicants are not entitled for benefit of Notification No. 12/2003-ST dated 20.6.2003, on the ground that applicants had not proved that no credit is availed of duty paid on the goods of material supplied.
1.3 It is the submission of the applicant that it is not a case of their claiming the benefit of the Notification but that they had paid VAT/Sales Tax on the material supplied and in any case they had not taken any credit of duty on the materials supplied. Inasmuch as the value of material supplied cannot be taken into consideration for the purpose of payment of service tax on erection and commissioning activity which is under separate agreement.
2. Another demand of Rs.1,21,66,560/- is confirmed on the ground that the applicant had undertaken erection, commissioning and installation service. In this matter, it is the submission that applicants had undertaken the activity of shifting of transmission lines as part of the road widening and such activity in view of Board Circular dt. 24.5.2010 is not covered as taxable service under clause of 105(65) of the Finance Act and, therefore, the demand is not sustainable.
3. There is also another demand of Rs.4,81,96,016/- which is confirmed on the ground that applicant provided construction service. It is the submission of the applicant that the same is in respect of railway and railway siding(which too is part of Railway as per Indian Railway Act, 1989) and which is specifically excluded from the ambit of ST levy under Construction Service and hence the demand is not sustainable.
4. Service Tax is of Rs.13,88,878/- is confirmed on the ground that applicant is liable to pay Service Tax under the taxing entry of Site formation and Clearance, Excavation and Earth Moving service. The applicant submits that they had entered into an agreement for sinking of shafts and the same is essentially a pre-mining activity, and would be covered under Mining Services which became taxable from 1.6.2007 only.
The Revenue representative did not have much to add except reiterate what the adjudicating authority had held.
The Bench observed -
“8. We find that there are two separate agreements with the MEPL. One is for supply of material and other is for erection, commissioning and installation service. Applicant had paid the appropriate service tax on erection commissioning service. Revenue wants to adding the value of material supplied for the purpose of service tax. We find that the supply of material is under a separate agreement and applicant paid Vat/Sales tax. Therefore prima facie the applicant has a strong case in their favour on this issue.
9. In respect of the demand of Rs.1,21,66,560/- the same is in respect of shifting overhead cables/wires for the reasons widening of road and as per the Circular dt. 24.5.2010, the same is not sustainable.
10. In respect of the demand of Rs.4,81,96,016/- which is made under the category of construction service and applicant had undertaken the activity for railway line at railway siding. As per the Finance Act, Railways are not covered under the construction service. Further as per the Indian Railway Act, 1989, siding is a part of railway. Hence, applicant has a strong case in their favour on this issue also. Similarly, in respect of demand of Rs.13,88,878/- the applicant has taken the activity of sinking of shaft of mines much before the mining services became taxable. In view of the above facts and circumstances of the case, the pre-deposit of dues are waived and recovery of the same is stayed during the pendency of appeal….”
In fine the Stay petitions were allowed.
(See 2013-TIOL-1735-CESTAT-MUM)
