ABL INFRASTRUCTURE PVT. LTD. Vs. COMMISSIONER OF C. EX.
LAWS(CE)-2015-1-140
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 07,2015

Abl Infrastructure Pvt. Ltd. Appellant
VERSUS
COMMISSIONER OF C. EX. Respondents




JUDGEMENT

P.S.PRUTHI - (1.)THE appellants are in appeal against the order of Commissioner of Central Excise, Nashik, who confirmed the demand of (i) Rs. 88,18,183/ - (ii) Rs. 35,64,563/ - and (iii) Rs. 1,81,747/ - and confirmed interest under Section 75, imposed penalty under Section 76 in respect of demands at Sr. Nos. (i) & (iii) above and imposed penalty of Rs. 35,64,563/ - under Section 78 in respect of demand in Sr. No. (ii).
(2.)The facts of the case are that the appellant was registered with Central Excise department in the category of Commercial or Industrial Construction Service. They obtained the contract for construction of City Centre Mall, Nashik for M/s. City Centre Mall (Pvt.) Ltd. under an Agreement executed on 8 -12 -2006. The material such as cement and steel was to be supplied by M/s. City Centre Mall Pvt. Ltd. Due to certain disputes, the contract was terminated on 31 -5 -2007 and separate invoice was raised for works completed prior to 31 -5 -2007. Thereafter, when M/s. City Centre Mall Pvt. Ltd. invited bids again for completing the construction of the mall, the appellant participated in the tender process and were again awarded the contract. Based on opinion from consultants, they started paying Service Tax under Works Contract Service for which registration was obtained on 26 -9 -2007. They started paying tax 2.06% under the Works Contract Composition Scheme. Audit of the appellant resulted in issue of show cause notices to them for the period June 2007 to March 2008 (show cause notice issued on 22 -4 -2009), April 2008 to Sept 2008 (show cause notice issued on 7 -9 -2009), June 2007 to March 2008 (show cause notice issued on 22 -4 -2009) for the reason that the appellants were not entitled to change the classification from 'Commercial or Industrial Construction Service' to 'Works Contract Service' for the same work undertaken by them i.e. to construct the City Centre Mall. Another allegation in the show cause notice is that they neither obtained registration under 'Works Contract Service' till 26 -9 -2007 nor exercised the option as required under Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax), Rules, 2007. Proceedings resulted in the passing of adjudication order confirming the demands of duty against which, the appellants are in appeal before us.
Heard both sides.

(3.)THE learned counsel for the appellants forcefully stated that the earlier contract entered into by them with M/s. City Centre Mall Pvt. Ltd. was terminated and the termination is valid in law in terms of the Indian Contract Act, 1872. After the introduction of Works Contract Service, they were legally, entitled to classify their activity in this service being the more specific classification. They relied on the following decisions: -
(i) Glaxo Smithkline Pharmaceuticals Ltd. v. Commissioner of Central Excise, Mumbai - : 2006 (3) STR 711 (Tri -Mum) : 2005 (188) E.L.T. 171 (T).

(ii) CCE, Ludhiana v. Lal Path Lab. (P) Ltd. - : 2007 (8) S.T.R. 337 (P&H).

(iii) Homa Engineering Works v. CCE - : 2007 (7) S.T.R. 546 (Tri. -Mum.).

(iv) BCCI v. CCE, Mumbai - : 2007 (7) S.T.R. 384 (Tri. -Mum.).

(v) Zee Telefilms Ltd. v. CCE - : 2006 (4) S.T.R. 349 (Tri. -Mum.).

3.1 At the time of the first hearing which took place on 10 -12 -2014, the learned counsel for the appellant agreed to produce documents to show that the termination of the earlier contract was perfectly valid in law and the new contract was awarded to them on competitive basis. Thereafter, on the second hearing on 7 -1 -2015, they placed before the Bench detailed documents which are: -

(i) Minutes of meeting of M/s. City Centre Mall Pvt. Ltd.

(ii) Invitation for tender by M/s. City Centre Mall Pvt. Ltd.

(iii) Comparative statement of Bidders for completion of City Centre Mall.

(iv) Bids submitted by the appellant with quotation.

(v) Ledger abstract of old contract between M/s. City Centre Mall Pvt. Ltd. and appellant.

(vi) Ledger abstract of new contract between M/s. City Centre Mall Pvt. Ltd. and appellant.

3.2 The learned counsel argued that Board's Circular No. , dated 4 -1 -2008 and the judgment of Hon'ble Andhra Pradesh High Court in the case of Nagarjuna Construction Company Ltd. v. Govt. of India - : 2010 (19) S.T.R. 321 (A.P.) referred to by the respondent side, only apply in cases where work is continued under the same contract through the period before the introduction of Works Contract Service as well as after the introduction of Works Contract Service. In their case, he stated that work was started under a fresh contract executed on 1 -6 -2007 for which their activity was classifiable under Works Contract Service. He further prayed that as they had paid Service Tax under Composition Scheme, by this very act they had satisfied the condition of exercising of option prior to payment of Service Tax in terms of Rule 3 of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. The learned counsel relied on the case of Bridge & Roof Co. (India) Ltd. v. Commissioner of Central Excise, Jaipur - : 2012 (27) S.T.R. 406 (Tri. -Del.).

3.3 On the issue of limitation, the learned counsel contended that the show cause notice for the period June, 2007 to" March, 2008 is time -barred because they had obtained registration under Works Contract Service and were paying duty correctly under the Composition Scheme. Therefore, according to him, no penalty is warranted under Sections 76 and 78 of the Finance Act, 1994.

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