[Order per : D.N. Panda, Member (J)]. - The appellant came in appeal against order of adjudication dated 27-11-2009 raising service tax demand of Rs. 1,10,22,279/- coupled with Education Cess of Rs. 2,20,445/- in respect of SCN dated 2-6-2008 and service tax demand of Rs. 35,31,854/- coupled with Education of Rs. 70,367 and Higher Education cess of Rs. 35,318/- in respect of SCN dated 21-4-2009 followed by interest and penalty of Rs. 1,12,42,724/- and penalty of Rs. 36,37,809/- in respect of SCN dated 2-6-2008 and 21-4-2009 respectively u/s 78 of the Finance Act, 1994 and penalty u/s 77 of the said Act. Adjudicating Authority held that the Appellant had provided ‘commercial or Industrial Construction Service’ and was liable to service tax for the period 10-9-2004 to 31-3-2007 and 1-4-2007 to 31-3-2008. It was held that the appellant was collecting service tax on Ready (Mix Concrete being sold under composite contract under works contract since 1-6-2007 and raised bills for the same. The Authority held that evidence on record prove that the appellant was providing services under contracts and agreements which besides supplying of ready mix concrete also includes various services service elements such as pumping, laying, placing & fixing of concrete at the site of construction. The services like transporting, pumping, laying, placing & fixing of RMC at the site of construction which by no stretch of imagination could not be termed as supply of RMC.
2. Moving the stay application the learned Counsel for the appellant submitted that learned Adjudicating Authority confirmed the demand made in the show cause notices rejecting submissions. He unjustly held that the appellant is not entitled to exclusion towards value of goods supplied, from the gross amount under Notification No. 12/2003-S.T., dated 7-6-2003. According to the learned counsel, findings of the Commissioner are not sustainable for the following reasons :
(i) The Commissioner has failed to appreciate that the appellant has entered into transactions for selling RMC for delivery at the site and, therefore, not exigible to service tax. The activities of pouring, pumping and laying of concrete is not a significant part of the transaction and incidental to transaction of sale. The whole activity-is sale transaction and there is no element service in it. In any case, the Commissioner has wrongly demanded service tax on the transactions for supply of RMC, where pumping, pouring and laying activities were not involved.
(ii) The Commissioner has wrongly relied upon the statement of the Manager, Finance of the appellant to observe that it has started collecting service tax on sale of RMC since 1-6-2007 being sold under composite works contracts. That the appellant has considered its transactions as works contract cannot be the basis to hold that the contracts of the appellant were not sale contracts. The appellant’s conduct cannot be the basis for deciding whether the transaction is sale or service. Since there is no estoppel against law, the issue has to be decided on its merit and not on what the appellant considered under erroneous understanding of the law.
(iii) The Commissioner has wrongly rejected the appellant’s submission that its activities are more appropriately covered under the category of ‘execution of works contract service’ as introduced with effect from 1-6-2007 and, therefore, no service tax was payable by it for contracts entered into prior to this date. The Hon’ble Tribunal has categorically held that service tax cannot be levied on works contract for any period prior to 1-6-2007.
(iv) The Commissioner has wrongly denied the benefit of the Notification No. 12/2003-S.T., dated 20-6-2003 which allows exclusion of the value of the goods sold to the service receiver in course of rendering taxable service from the value of the taxable service.
(v) The Commissioner has wrongly held that the provisions of the extended period have rightly been invoked in this matter. The appellant was under the bona fide belief that its activities were not taxable. The Commissioner has failed to appreciate that there was no intention of evading tax as it had started paying the service tax with effect from 1-6-2007 suo motu as per the amendment made in the Act.
(vi) The Commissioner has not considered that it had not received any service tax over and above the gross amount collected from its customers. He has computed the tax demand on the amounts received by it, when such amount should have been treated as inclusive of tax.
(vii) There is no justification for levy of any penalty on the appellant.
3. Ld. DR appearing on behalf of Revenue supported the order of adjudication and submitted that the appellant was providing the commercial and Industrial construction service for which right adjudication was made. He relied para 4.1 of the order of adjudication to support the claim of Revenue.
4. Heard both sides and perused the record.
5. Para 2 read with Para 3 of the order of adjudication exhibit that besides supplying Ready Mix Concrete (RMC) the appellant was engaged in the preparation of ready mix concrete and also providing services such as transporting, pumping, laying, placing and fixing of RMC at the construction site. Prima facie, the sum and substance of the order of adjudication throws light on the primary activity of supply of ready mix concrete without satisfying elements of Industrial and commercial construction services which can be thoroughly examined in the course of regular hearing for which we dispense with requirement of pre-deposit during pendancy of appeal. However, Revenue may seek early hearing of the appeal in view of high stake involved in the matter.
(Reasons of decision and the decision pronounced in the open Court on the date of hearing)