Page 188 - GSTL_2nd July 2020 _Vol 38_Part 1

106 GST LAW TIMES [ Vol. 38
the plants and it discharged the Service Tax liability on such work orders. How-
ever, the appellant also supplied cranes and mobilized/transported labour for
parties under different work orders. According to the appellant, these activities
of supply of cranes and mobilization/transportation of labour are independent
activities not related at all to the work orders under which the appellant per-
formed the activity of erection and installation of plants. The appellant also
claims that for these separate work orders issued for supply of cranes and mobi-
lization/transport of labour, separate invoices were issued and since such ser-
vices were not taxable, the appellant reflected the same as “exempted” in the ST-
3 Returns filed by it. The appellant further claims that on introduction of a sepa-
rate category of service for supply of tangible goods under Section 65(105)(zzzzj)
of the Finance Act, 1994 [The Act] with effect from 16 May, 2008, the appellant
started to discharge Service Tax liability on the income received from the supply
of cranes.
3. However, on scrutiny of the records, the audit wing of the Central
Excise Commissionerate, Jaipur-II for the period April, 2007 to March, 2008,
found that :-
(i) The appellant was providing fabrication, erection & commissioning
services as per the contract made with different service receivers;
(ii) As per the terms & conditions of the contracts, the appellant was
required to provide services by making its own arrangement of ma-
chinery, tools, equipments, cranes and labour etc.;
(iii) The appellant had raised separate bills for collecting the charges in
respect of crane hire charges, labour transportation charges, labour
mobilization charges, tools/equipments mobilization charges which
were used for completion of the contract;
(iv) The assessee had used the machinery, tools, equipments, cranes and
labour for completion of the work to be performed under the con-
tracts and collected Rs. 5,50,83,066/- on this account from the ser-
vice recipient in the year 2007-08. The assessee raised separate bills
for Rs. 5,50,83,066/- but had not included this amount in the value
of services provided under the work orders/contracts and thereby
not paid/short paid Service Tax amounting to Rs. 68,04,792/- (in-
cluding of Edu. Cess+ HSE Cess) on this amount; and
(v) The value of taxable service in such cases is required to be deter-
mined in the light of provisions of Section 67 of the Act and the Ser-
vice Tax (Determination of Value) Rules, 2006 [2006 Rules].
4. Accordingly, a show cause notice dated 20 April, 2010 was issued to
the appellant mentioning that as per Rule 5(1) of 2006 Rules, where any expendi-
ture or cost is incurred by the service provider in the course of providing taxable
service, all such expenditure or costs shall be treated as consideration for the tax-
able service provided or to be provided and shall be included in the value for the
purpose of charging service tax on the said service. In view of above, machinery
charges collected for use of tools, equipments, cranes and labour charges are in-
cludible in the taxable value in terms of Section 67 of the Act read with provi-
sions of the 2006 Rules. The assessee had used the machinery, tools equipments,
cranes and labour etc. for completion of each work allotted to them under con-
tract for which they realized a value of Rs. 83,09,388/- during the period 2004-05
to 2006-07 and Rs. 5,50,83,066/- during the period 2007-08 from their principal
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