P. Anjani Kumar ORDER
Sulekha Beevi C.S., Member (J)
1. The issue involved in both these appeals being the same, they are heard together and disposed of by this common order.
2. Brief facts of the case are that the appellants are engaged in the business of supply, erection, commissioning and maintenance and repairs of lifts, elevators. They hold Central Excise registration under the category of "Erection and Commissioning Services" and "Maintenance and Repair Services". During the course of audit, it was noticed that the appellant received orders for the provision of lift/elevators at the customers' site as per their requirement and an agreement/contract for supply, installation, testing and commissioning of the lift was entered into between the appellant and their customers. The agreements specified type of lift and its specifications including warranty and maintenance conditions and also enumerated the items/work in the nature of providing shafts, pits essential for the execution of the contract which was required by the customers.
3. As per the agreement, the prices per unit for the provision of the lift is quoted under two heads (i) the price for design, supply, installation and commissioning of the lift, which is inclusive of the Value Added Tax (VAT) (ii) the prices for installation and commissioning of the lift which is inclusive of the service tax.
4. The invoice for the value of the first component as above was raised with the description "Supply of Passenger lift material" on which the appellant discharged VAT. Invoice value for the second component was raised with the description "Erection, Commissioning and Installation charges" on which appellant paid service tax.
5. It appeared to the department that the contract entered into by the appellant for providing lift was composite in nature which involved both supply of material and rendering of services. In terms of CBEC instructions in Letter [F. No. B1/16/2007-TRU) dated 22.5.2007, the contracts which are treated as works contract for the purpose of levy of VAT/sales tax shall also be treated as works contract for the purpose of levy of service tax. The audit also found that the appellant had filed VAT returns declaring their activity as 'Works Contracts Service'. In their letter dated 04.05.2015, the appellant stated that they had discharged VAT on 85% of the contract value and paid service tax on 15% as per the provisions of Rule 8(5)(d) of Tamil Nadu VAT Rules, 2007 taking the sale value of goods involved therein notionally at 85% of the contract value and remaining 15% as the value of labour involved for payment of service tax.
6. The department entertained a view that value adopted by the appellant for payment of VAT was not the actual value of the goods supplied while providing lift/escalators and that it was only a notional value. The service being in the nature of a work contract service for original works, service tax is liable to be paid on 40% of the contract value. Show cause notice was issued for different periods proposing to demand short paid service tax along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed equal penalty which was upheld by Commissioner (Appeals). Aggrieved by such orders, the appellant is now before the Tribunal.
7. Ld. Counsel Shri V. Ravindran appeared and argued for the appellant. He submitted that the period involved is from October 2010 to March 2015 and April 2015 to June 2017. The appellant had supplied, installed, tested and commissioned the lifts/elevators at customers' premises. The appellants had discharged the VAT as per Rule 8 (5) (d) of the Tamil Nadu VAT Rules, 2007 thereby paid VAT on 85% of the contract value. The appellant had discharged service tax on the balance 15% under the category of 'Erection, Commissioning and Installation Services'. The department now proposes to demand on the contract value which has already been subjected to levy of VAT. He submitted that it is settled position of law that VAT and Se........