RAJ ENGINEERS Vs C.C.E. & S.T.-RAJKOT 

Order date – 23 January 2023

Facts –

• The appellant, Raj Engineers having service tax registration, during 2005-2006 to 2008-2009 have provided composite contract service in Reliance Township Jamnagar.
• The appellant have paid service tax only on service portion deducting value of material supplied claiming the benefit granted under Notification No.12/03-ST dated 20.06.2003.
• The department proposing denial of benefit of Notification No. 12/03-ST dated 20.06.2003 and issued a show cause notice dated 01.09.2010 considering the gross value i.e. including cost of material and service provider.

Issue –

• Whether the demand on service tax is otherwise sustainable on the submission of the appellant that they are eligible for composite contract scheme alternatively abatement Notification No. 15/2004-ST and 01/2006-ST.

Order –

• The Tribunal observed that the limited issue to be decided in the facts of the present case is whether the appellant is eligible for exemption notification No. 12/03-ST which provides the abatement of value to the extent of material cost.
• Since the appellant have declared a material cost and the same was accepted by the service recipient, no doubt can be raised that the material cost declared in the invoice is incorrect unless is proved contrary by the department.
• The appellant have taken the abatement ranging from 30% to 48%. Thus, despite the availability of abatement as per the notification.
• The appellant have paid the service tax on much higher value, for this reason also the demand is absolutely unsustainable.
• Appeal is allowed.