Order Date – 08 June 2023

Parties: Larsen & Toubro Limited Vs Commissioner of Central Excise & ST, Vadodara

Facts – 

• The Appellant, Larsen & Toubro Limited, were granted a power project by M/S Visa Power Limited ("VISA "). The contract involved supply of materials as well as erection and installation and civil work.
• For the purpose of discharging applicable taxes on the advance received the Appellants self-perceived 60% of amount to be attributable towards the -Supply Portion' and balance 40% of amount be attributable towards 'Service Portion' and thus discharged the Service Tax of Rs. 1.65,83,000/-
• Subsequent to formation of contracts, M/s. VISA informed the Appellants that the entire advance amount should be appropriated towards value of supplies only and no part thereof was towards providing of any services.
• They suo-moto adjusted the earlier payment of service tax of Rs. 1,87,93,065/- towards payment of service tax of Rs. 2,29,18,015/- in terms Rule 6(4A) and 6(4B) of the Service Tax Rules, 1994 and paid the balance service tax of Rs. 41,24,951 from their Cenvat Credit account on 06.02.2012.
• A show cause notice dated 19.02.2013 was issued, proposing demand against such irregular adjustment of Rs. 1,87,93,063/-

Issue – 

• Whether the services provided to customers / members for effluent treatment and disposal of waste are classifiable under the category of service of club and association service?

Order – 

• The Tribunal observed that if VISA had informed the appellant at a later stage that the whole of the advance was to be appropriated towards cost of material, the same cannot be disputed without any evidence to the contrary. It is a settled law that the terms of the contract between the parties are to be accepted so far as those do not infringe the law.
• If the appellant did not have annulled the gross taxable value of Rs. 20.125 crore inclusive of tax (net taxable value Rs. 18.22 Crore) but computed this value as already received and reduced from the final taxable value of Rs. 22.25 crore, it would have made no difference on the tax liability of the appellant.
• It is not disputed in the impugned order that the total advance received by the appellant was not 22.25 crore. Thus, there was in reality no short payment by the appellant.
• The findings of the Ld. Commissioner, that the appellant could not have adjusted the excess tax paid on 4.11.2010/31.03.2011 beyond the month of Nov 2010/April 2011 is also not sustainable in view of the Tribunal's decision in the matter of General Manager (CMTS) v. CCE, 2014 (8) TMI 589