2023-VIL-1284-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 65(105)(zzzzj) and 78 of Finance Act, 1994 – Erection and commissioning service – Demand of tax – Entitlement of abatement – Examination of audited financial accounts of Appellant revealed that Appellant has received certain sum from various clients on which no Service Tax was paid for respective years – On basis of said verification, Revenue issued show cause notice proposing demand of Service Tax – Commissioner confirmed demand under Erection and Commissioning Service and Supply of Tangible Goods Service – Whether Commissioner is justified in confirming demand under head ‘Erection and Commissioning Service’ on gross value without giving 67% abatement claimed by Appellant – HELD – Board has issued Circular No.80/10/2004 clarifying the issue – From perusal of Circular, it is evident that if a service provider wanted to avail abatement of actual material used in providing service as per Notification 12/2003, they have to provide all bills evidencing sale of material – In a composite contract involving material and service, service provider is not required to submit bills evidencing sale of materials used in providing service to avail abatement of 67% – It is enough if terms of contract indicate that materials also involved in providing service and bill raised includes material cost also – Terms of contract clearly indicate that erection and commissioning service rendered by Appellant involves supply of materials and bills raised by Appellant include material cost also – Appellant is eligible for 67% abatement on gross value and liable to pay service tax only on 33% of value of service – Demand confirmed in impugned order without giving 67% abatement is not sustainable and set aside – Appeal is disposed of - Crane hiring charges – Demand of service tax on Crane Hiring Charges under category of 'Supply of Tangible Goods service' – HELD – As per Section 65(105)(zzzzj) of the Act, service provided in relation to machinery and equipments for use, without transferring right of possession and effective control of machinery is liable to service tax under category of Supply of Tangible Goods service w.e.f. 16-5-2008 – Perusal of terms and conditions of contracts for Crane Hiring clearly indicate that Appellant has not transferred possession and effective control of cranes to transferee and they have only transferred 'right to use' cranes to transferee – Service of Crane hiring rendered by Appellant falls within ambit of Supply of tangible Goods service as defined under Section 65(105)(zzzzj) of the Act – Adjudicating authority has rightly confirmed demand of service tax on Crane hiring Charges under category of Supply of Tangible Goods service w.e.f 16-5-2008 – Since Appellant had disclosed income on Crane Hiring in balance sheet and not suppressed any information, extended period is not invocable and demand is restricted to normal period of limitation – As suppression of fact with intention to evade payment of tax has not been established, penalty imposed under Section 78 of the Act is set aside.
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