M/S S.S.Construction vs Union Of India And Ors
2024 Latest Caselaw 9791 P&H

Punjab-Haryana High Court

M/S S.S.Construction vs Union Of India And Ors on 7 May, 2024

Author: Sanjeev Prakash Sharma

Bench: Sanjeev Prakash Sharma

                                Neutral Citation No:=2024:PHHC:063053-DB



CWP-20584-2008
          2008 (O&M)             [1]

205          IN THE HIGH COURT OF PUNJAB AND HARYANA
                        AT CHANDIGARH

                                               CWP
                                               CWP-20584-2008 (O&M)
                                               Date of Decision: 07.05.2024.


M/s S.S. Construction                                         ...Petitioner

                                       Vs.

Union of India and others                                     ...Respondents



CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
       HON'BLE MRS.
               M    JUSTICE SUDEEPTI SHARMA

Present      Ms. Radhika Suri, Sr. Advocate with
             M
             Mr. Abhinav Narang,, Advocate for the petitioner.

             Mr. Anshuman Chopra, Sr. Standing Counsel with
             Mr. Deepesh Kakkar, Advocate for the respondents.
                  ***

SANJEEV PRAKASH SHARMA, J.(Oral)

1. Learned counsel for the petitioner as well as respondents are ad--

idem that the issue raised in the present petition stands finally adjudicated by

Hon'ble the Supreme Court in Commissioner, Central Excise and Customs,

Kerla vs. M/s Larsen and Toubro Ltd. (2016) 1 SCC 170 and subsequent

judgment in Commissioner of Service Tax vs. B Bhayana hayana Builders (P) Ltd.

2018 (1) G.S.T.L. 118 (S.C.), (S.C.), wherein, Hon'ble the Supreme Court by

relying on the judgment in M/s Larsen and Toubro Ltd.'s case (supra)

observed as under:-

under:

"19. Matter can be looked into from another angle as well. In the "19.

case of Commissioner, Central Excise and Customs, Kera Kerala la v.

M/s. Larsen & Toubro Ltd. This Court was concerned with

exemption notifications which were issued in respect of 'taxable

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services' covered by sub-clause sub clause (zzq) of clause (105) read with

clause (25b) and an sub-clause clause (zzzh) of clause (105) read with 1

(2016) 1 SCC 170 clause (30a) and (91a) of Section 65 of

Chapter V of the Act. This Court in the aforesaid judgment in

respect of five 'taxable services' [viz. Section 65(105)(g), (zzd),

(zzh), (zzq) and (zzzh)] (zzzh)] has held as under:

"23. A close look at the Finance Act, 1994 would show

that the five fixed taxable services referred to in the

charging Section 65(105) would refer only to service co con-

n-

tracts simpliciter and not to composite works contracts.

This is clear from the very language of Section 65(105)

which defines 'taxable service' as 'any service provided'.

Further, while referring to exemption notifications, it oob-

b-

served:

"42. ...Since the levy itself of service tax has been found to

be non-existent, no question of any exemption would

arise."

It is clear from the above that the service tax is to be lle-

e-

vied in respect of 'taxable services' and for the purpose of

arriving at 33% of the gross amount charged, unless va val-

l-

ue of some goods/materials is specifically included by the

Legislature, that cannot be added.

20. It is to be borne in mind that the notifications in questions

are exemption notifications which have been issued under

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Section 93 of the Act. As per Section 93, the Central

Government is empowered to grant exemption from the levy of

service tax either wholly or partially, which is leviable on any

'taxable service' defined in any of sub sub-clauses clauses of clause (105) of

Section 65. Thus, exemption under Section 93 can only be

granted in respect of those activities which the Parliament is granted

competent to levy service tax and covered by sub sub-clause clause (zzq) of

clause (105) and sub-clause sub clause (zzzh) of clause (105) of Section 65

of Chapter V of the Act under which such notifications were iis-

s-

sued.

2. Learned counsel for the petitioner has taken this Court to the

exemption notification dated 01.03.2006 to point out that the explanation and

conditions laid down in column No.7 No.7 of the notification relating to the

commercial or industrial construction service goes contrary to the law laid

down by Hon'ble the Supreme Court in M/s Larsen and Toubro Ltd.'s and

Bhayana Builders (P) Ltd.'s Ltd. case (supra). She has also submitted that on

account of the aforesaid explanation show cause notice was issued on the

basis of audit report, which reads as under:-

under:

M/s S.S. Construction, Chandigarh are engaged in providing the

service of industrial and commercial construction for which they

are registered registered under the Service Tax Act. They are also availing

the benefit of 67% abatement of the value of the service under

notification No.1/2006 ST.

S . dated 01.03.2006 as amended and

earlier notification No.15/2004/ST and are discharging their tax

liability on 33%. However, the explanation appended to S. 2007

of the said notification requires that the gross amount charged

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shall include the value of the materials supplied or provided or

used by the service provider of the construction service for

providing such service. The definition of 'gross amount charged'

under Section 67(4)(c) is an inclusive definition and stipulated

that gross amount charged among other things includes

payments received by various modes and is not restricted to

payments received only. It is further for the position as given

under the above explanation appended to S. No.7 of the

notification No.2006-ST No.2006 ST that the value of the materials supplied

or provided is also to be included in the gross amount charged

for the purpose of discharge service tax. By virtue of this

provision, the amount was required tin include the value of

material supplied or provided to them by the party whose

construction work was being carried out or otherwise the

material used for the service for the purpose of availing

abatement and discharge service tax on the balance 33%.

3. Learned counsel submits that in view of settled law as above, the

show cause notice issued by the respondents deserved to be quashed and the

condition laid down in notification dated 01.03.2006 aalso lso should be treated as

deleted in terms of the judgment of Hon'ble the Supreme Court in M/s

Larsen and Toubro Ltd.'s and Bhayana Builders (P) Ltd.

Ltd.'s case (supra).

4. Learned counsel for the revenue fairly states that conditions go

contrary to the settled law as laid down by Hon'ble the Supreme Court in M/s

Larsen and Toubro Ltd.'s and Bhayana Builders (P) Ltd.

Ltd.'s case (supra).

5. Having noticed the judgments passed by the Hon'ble Apex

Court, we are satisfied that so far as the contractor engages in commercial or

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industrial construction service, would not be required to include the gross

amount charged relating to goods and material supplied for providing such

services and, therefore, the explanation mentioned in notification dated

01.03.2006, would stand deleted and accordingly the show cause notice

issued to the petitioner dated 03.11.2008, could not be substantiated in law.

6. In view thereof, the writ petition deserves to be allowed and is

accordingly ordingly allowed.

7. All pending misc. application(s) also stand disposed of.

(SANJEEV PRAKASH SHARMA) JUDGE

(SUDEEPTI SHARMA) JUDGE

07.05.2024.

rajesh

1. Whether speaking/reasoned? : Yes/No

2. Whether reportable? : Yes/No

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