Ruchi Goyal & Anr. vs. Nbcc(INDIA) LTD.{Formerly National Building Construction Corporation LTD.} & Ors.

Held

The Court held that the amendment to Rule 2A of the Service Tax (Determination of Value) Rules, 2006, specifically pertains to the determination of the value of the service portion in the execution of a works contract. The Court noted that its previous decision in Suresh Kumar Bansal v. UOI, which invalidated Section 65 (105) (zzzh) of the Finance Act, 2010, was based on the scope of 'construction of complex' and did not delve into whether a composite contract for development and sale could fall under Section 65 (105) (zzzza) (works contract). Therefore, the Court found merit in the Respondent's contention that the amendment to Rule 2A, being specific to works contracts, did not advance the case of the Petitioner (Review Petitioner). As no other grounds were urged, the review petition was dismissed.

Facts

The Principal Commissioner, GST and CX (Petitioner) filed a review petition against a previous order of the Delhi High Court dated December 12, 2018, which had allowed a writ petition filed by NBCC (India) Ltd. and others (Respondents). The Petitioner argued that the Court's earlier decision, which relied on Suresh Kumar Bansal v. UOI, was made without considering a crucial amendment to Rule 2A of the Service Tax (Determination of Value) Rules, 2006. This amendment, effective March 31, 2017, introduced a mechanism to separately determine the value of land and goods for works contracts. The Petitioner contended this amendment removed the basis for striking down Section 65 (105) (zzzh) of the Finance Act, 2010.

Key Issues

1. Whether the amendment to Rule 2A of the Service Tax (Determination of Value) Rules, 2006, made on March 31, 2017, impacts the previous decision of this Court in Suresh Kumar Bansal v. UOI, which struck down Section 65 (105) (zzzh) of the Finance Act, 2010. Petitioner's Argument: The amendment to Rule 2A provides a mechanism to separately value land and goods in works contracts, thereby removing the basis on which Section 65 (105) (zzzh) was previously invalidated. The Petitioner relied on the amended Rule 2A. Respondent's Argument: The amendment to Rule 2A is specific to 'works contracts' under Section 65 (105) (zzzza) of the Finance Act, 2010, and does not apply to 'construction of complex' as covered by Section 65 (105) (zzzh), which was the subject of the earlier decision. The Respondent relied on the distinction between the two sections.