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Erection, Commissioning or Installation Services [Sec 65(105)(zzd)]
Effective upto 30th June, 2012
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Landmark Service Tax Judgement - Erection, Commissioning or Installation Services

INTRODUCED: With Effect From 1st July 2003
 
Contents
Scope
Exemption
Relevant Notifications / Circulars
Landmark Judgements
Accounting Code
Service Tax 00440233
Interest  00440234
Penalty 00441376
 
DEFINITION:

According to Section 65 (105) (zzd), any service provided or to be provided to any person, by a commissioning and installation agency in relation to erection, commissioning or installation, is a ‘taxable service’.

According to Section 65 (29), ‘Commissioning and installation agency’ means any agency providing service in relation to erection, commissioning or installation

According to Section 65 (39a), “erection, commissioning or installation” means any service provided by a commissioning and installation agency, in relation to,--

(i)   Erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise; or

(ii)  Installation of -

(a) electrical and electronic devices, including wirings or fittings therefore; or

(b) plumbing, drain laying or other installations for transport of fluids; or

(c) heating, ventilation or air-conditioning including related pipe work, ductwork     and sheet metal work; or

(d) thermal insulation, sound insulation, fire proofing or water proofing; or

(e) lift and escalator, fire escape staircases or travelators; or

(f) such other similar services

 
SCOPE:
TOP

The general practice is that 'erection, commissioning and installation' are contracted as a composite package. There have been a number of doubts and queries regarding the distinction between erection and commissioning/installation. Erection would refer to the civil works to installation/commissioning of a plant or machinery. Erection involves civil works, which would otherwise fall under the category of construction services. However, in case of a composite contract for erection, commissioning and installation, the erection charges would be taxed as part of this category of service.

In case of commissioning and installation it has been pointed out that in case of turnkey project, the contract may be indivisible and no separate value could be assigned to commissioning or installation of goods. Doubts have also been raised as to what would be the value of taxable service. It is submitted that it has been provided in law that service tax is leviable on erection and commissioning charges only and not on the material and goods supplied. However, it is up to the service provider to show the break-up of commissioning or installation charges. In case service provider shows consolidated charges, service tax would be leviable on such consolidated amount.

Works contract for carrying out erection, commissioning or installation would be taxed under Execution of Works Contract Service.

 
SERVICE TAX EXEMPTIONS:
TOP

(a) Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/-  (Service Tax Notification No. 08/2008-S.T., dated 01.03.2008)

(b) Services provided to the United Nations or International Organisations

(c) Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers

(d) Services which are exported as per ‘Export of Services’ Rules

(e) Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.

(f) Services provided by Reserve Bank of India

(g) Out of total value of service provided proportionate value of goods and material provided by the Service Provider

 
SERVICE SPECIFIC EXEMPTION:

1. 67% abatement is available for providing Erection, Commissioning or Installation Services if the gross amount charged from the customer shall include the value of the plant, machinery, equipment, structures, parts and any other material sold by the commissioning and installation agency, during the course of providing erection, commissioning or installation service.. Thus, effective rate of Service Tax levy is 33%

 
RELEVANT SERVICE TAX NOTIFICATIONS:
TOP
Service Tax Notification No. 21/2006-S.T., dated 23-05-2006 (Effective from 23-05-2006) Amendment to Notification No. 01/2006-S.T., dated 01-03-2006 to extend the abatement to structures
Service Tax Notification No. 01/2006-S.T., dated 01-03-2006 Abatement Notification
Service Tax Notification No. 25/2004-S.T., dated 10-09-2004 Exemption Notification
 
RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES:
Service Tax CBEC Instruction Letter (File No. 334/1/2007- TRU), dated 28-02-2007
Service Tax Circular No. 80/10/2004-S.T., dated 17-09-2004 Clarification of Scope
Service Tax CBEC Circular No. 59/8/2003-S.T.,  dated 20-06-2003 Clarifications regarding the value and scope of service tax on services introduced by the Finance Act, 2003 including commissioning and installation services
 
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Case Laws Related

  • STO 2014 CESTAT 1
  • Erection , Commissioning & Installation Service: Abatement: Inclusion of value of tanks and pumps supplied by the client:  The gross amount charged from the customer shall include the value of plant, machinery, equipment, parts and any other material sold by the commissioning agency, during the course of providing service. The Notification states in unambiguous terms that the gross amount charges shall include the value of plant, other material etc. sold. It does not speak of the cost of material supplied by the service receiver, and therefore it will be improper to read this in the Notification and arrive at an unintended conclusion. Tanks and pumps which are required to be installed themselves, cannot be considered to be material supplied by the clients for installing any other goods. Value not includible in view of Larger Bench judgment in the case of Bhayana Builders. Benefit of Notification No 1/2006 - S.T. is available.

  • STO 2013 CESTAT 1127
  • Installation, Erection & Commissioning: Demand: Contract is for 'Installation and Commissioning of Captive Power Plant: Period in dispute is prior to 1.7.2003: In view of the Board's Circular and in view of the fact that Installation and Commissioning Service comes under the scope of the Service Tax with effect from 1.7.2003, the demand is not sustainable.

  • STO 2013 CESTAT 1279
  • Erection, Commissioning or Installation: Demand: Stay: Applicant is engaged in fabrication and erection of items viz. sliding gates and rolling shutters: Prima facie, the finding in the adjudication order that they were doing construction activity appears to be not proper: Condition given in the notification is that "there is documentary proof specifically indicating the value of the said goods and materials". The reason to reject VAT returns as a valid proof is not specified by the lower authorities: Pre deposit waived.

  • STO 2013 CESTAT 1237
  • Erection, Commissioning or Installation: Demand: Stay: Applicant is engaged in fabrication and erection of items viz. sliding gates and rolling shutters: Prima facie, the finding in the adjudication order that they were doing construction activity appears to be not proper: Condition given in the notification is that "there is documentary proof specifically indicating the value of the said goods and materials". The reason to reject VAT returns as a valid proof is not specified by the lower authorities: Pre deposit waived.

  • STO 2013 CESTAT 587
  • Erection, Commissioning and Installation Service: Non speaking order passed: Correspondence between CPWD and the department shows department was aware of activities of appellants: Matter remanded as appellants have already deposited Rs.5 lakh.

  • STO 2013 CESTAT 843
  • Erection, Commissioning or Installation service: As far as the fabrication or erection of tank at site is concerned, the activity brings into existence an immovable property. Therefore, it cannot be said that the appellant has undertaken any manufacturing activity defined under Section 2(f) of the Central Excise Act, 1944. Therefore, the activity undertaken by the appellant would qualify as erection, commissioning and installation services.

  • STO 2013 CESTAT 1124
  • Erection, Commissioning or Installation: Demand: Main question in dispute is whether the utilization of welding electrodes by the appellants at their own cost can be considered as transfer of property when the conveyor system was erected and installed: There is no consideration as to whether the items used by the appellants namely welding electrodes and other consumables (if any) and their transfer after erection and installation work is over can be said to be transfer of property in terms of definition of "works contract": Matter remanded.

  • STO 2013 CESTAT 703
  • Input Services: Erection, Commissioning or Installation: Services of sub-contractor sought for ECI: appellant is availing the services of the sub-contractor for providing an output service on which he is discharging the Service Tax liability under the head Erection, Installation and commissioning- services: Credit prima facie admissible: Pre deposit waived.

  • STO 2013 CESTAT 874
  • Erection Commissioning Service: Works Contract: Appellants paid VAT on the composite contract : Arguable case: directions for pre deposit issued.

  • STO 2013 CESTAT 520
  • Erection Commissioning or Installation: Works Contract: Laying of pipelines is for water supply for the project of TWAD Board which is a non-commercial organization: Pre deposit waived.

  • STO 2013 CESTAT 394
  • 'Erection, Installation and Commissioning Service': Service came into the tax net only w.e.f. July, 2003 whereas the impugned demand pertains to the period 1999-2000: Demand set aside.

  • STO 2013 CESTAT 420
  • Erection, Commissioning or Installation: Appellants rendered service of erecting sluice gates for the various irrigation projects of Government of Maharashtra: Unconditional stay granted in similar matters: Unconditional stay granted in this case.

  • STO 2013 CESTAT 372
  • Erection, Commissioning & Installation: Works Contract: Facts not properly examined by the authorities: Matter remanded back.

  • STO 2013 CESTAT 674
  • Erection Commissioning or Installation: Land Development Charges and NOC Fees collected by the appellants for installing Generator Sets: In appellants own case unconditional stay granted on demand relating to NOC charges: Regarding land development charges, the value of land should not be included in the taxable value: Directions issued for partial pre deposit on demand relating to land development charges.

  • STO 2013 CESTAT 434
  • Commissioning and Installation: Reverse Charge: Demand is not sustainable in law as the transaction took place prior to 18/04/2006.

  • STO 2013 CESTAT 181
  • Erection, Commissioning and Installation service: Cabling work: Appellant is outsourcing the cabling work: It is undisputed that the sub-contractor who is completing the job of cabling, is not discharging any Service Tax liability: The appellant has been filing the Service Tax returns: Service Tax liability worked out for the last 5 years due to the query raised by the Audit party: There is an amount of Service Tax liability which is within the limitation period: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 191
  • Demand: Stay: Erection, Commissioning and Installation Services: From the copy of the tender documents, it is evident that the activity undertaken by the appellant is in the nature of a turnkey project for the lift irrigation scheme and involves supply of both materials and erection/installation of the same apart from design/manufacture: Prima facie the services rendered by the appellant fall under the category of "Works Contract Services" and the same is excluded from the purview of the Service Tax under Section 65 (105) (zzzza) of the Finance Act, 1994: Stay granted.

  • STO 2012 CESTAT 1039
  • Erection, Commissioning: Agricultural dam: Irrigation department not a erection commissioning agency: Agricultural dam or sluice gates thereto cannot be considered as a plant and machinery or equipment or structures thereof. They are in the nature of infrastructural construction catering to the needs of agriculture. They are excluded from the purview of service tax levy both under the category of commercial and industrial construction service and Works Contract services.

  • STO 2012 CESTAT 1009
  • Erection, Commissioning: once the appellant has paid Customs duty on the entire value of machinery imported, which according to the Revenue incIudes the value of erection, commissioning, it is not proper to artificially segregate the said value into two parts i.e. value of the machinery and value of services: Prima facie case found and waiver from pre deposit granted.

  • STO 2012 CESTAT 555
  • Transmission of Electricity Services: Any activity or service like erection, commissioning and installation of meters as also technical testing and analysis can easily be termed as the service relating to the transmission and distribution of electricity provided by the service provider to the service receiver: Demand dropped.

  • STO 2012 CESTAT 311
  • Business Auxiliary Service V/s Erection, Commissioning or Installation: Any service provided in relation to installation of electrical and electronic devices, including wirings or fittings, became taxable from 16-06-05.

  • STO 2012 CESTAT 194
  • Erection, Commissioning or Installation Service v/s Works Contract Service: department alleged that contracts for design, manufacture, commissioning and testing of signalling system and telecom systems for the railways, they have provided the services falling under the category of installation and commissioning agency services: Bench held earlier in other case that such service would not get covered under the category of installation and commissioning services for the period prior to 1.6.2007: Stay granted.

  • STO 2012 CESTAT 251
  • Erection Commissioning or Installation Service: Appellants considered the turnkey projects as works contract: prior to 01.6.2007 service tax liability on works contract does not arise: Stay granted. 

  • STO 2012 CESTAT 197
  • "Erection Commissioning or Installation Service": Inclusion of value of materials: deemed sale defined in Article 366 (29A) of the Constitution will constitute sale for the purpose of levying service tax: for claiming exemption under Notification 12/2003-S.T the invoice need not necessarily indicate the value of the goods sold separately: When both levies of excise duty and service tax possible, it is for the assessee to choose which would be beneficial to them.

  • STO 2012 CESTAT 348
  • Erection & Commissioning: Supply of Elevators : Finance Act, 1994 is not commodity taxation law. It requires service declared as taxable service levy law is to be taxed to the extent permitted by law. Matter remanded back with directions.

  • STO 2012 CESTAT 172
  • Erection, Commissioning or Installation: Prior to 1.5.2006 no service tax was payable on erection of pre-fabricated structures.

  • STO 2012 CESTAT 131
  • Erection, Commissioning or Installation Service: Appellants selling solar water heater system through dealers also, but in all cases they are doing installation activity on which tax is not paid: Activity covered under Installation service: For working out demand matter remanded to adjudicating authority.

  • STO 2012 CESTAT 52
  • Erection & Commissioning Services: Claim of the assessee that their services not covered under this category, also that they did not get chance of natural justice before lower authorities and their appeal dismissed for non compliance of Section 35F as they found it difficult to fulfill the condition: Matter remanded.

  • STO 2012 CESTAT 38
  • Erection, Commissioning or Installation: Manufacture at site presumed to be manufacturing activity by the appellants, hence, service tax not paid: Prima facie case for waiver not found: Pre deposit ordered.

  • STO 2011 CESTAT 291
  • Service Tax: Service tax on figures appearing in Balance sheet under the head 'Other Income’: Those receipts are not of the nature of any taxable service provided by the appellant. Therefore, the demand of service tax not arising out of any taxable service should not have been confirmed. As such, that demand is set aside.(Para 8).

    Service Tax: 'Erection, Commissioning or Installation Services' and 'Technical Inspection and Certificate Services': Taxable event: The issue whether the appellant falls in the category of providing taxable service has not been alleged while notice issuing authority was quite aware that Section 65(105)(zzd) required commissioning and installation agency providing commissioning services were to be taxed if primary activity was of that nature.(Para 12). Assessee is a power supply company and to realize power consumption charges, they install meters at the place of Consumption. As a measure of safety, the meters undergo testing and retesting. It is a public sector company set up for supply of electricity following safety measures. Testing fees is realized while primary object of supply of power was fulfilled. The fees so realized does not convince to say that the respondent is an agency engaged in providing taxable service of erection, installation or commissioning or testing service as a testing agency. Revenue therefore, fails for which its appeal is dismissed.(Para 13).

  • STO 2011 CESTAT 309
  • Erection, Installation & Commissioning Service: Identical matter decided in respect of the same contract entered between DMRC and appellants: Falls under “Works Contract” hence not taxable during the period for which demand raised.

  • STO 2011 CESTAT 181
  • Service Tax: laying of pipelines under the category ‘Erection, Commissioning or Installation' service from 10/9/2004: Demand: Said activity of the appellant is for the purpose of supply of drinking water to various village panchayats. This activity has been considered as prima-facie not taxable and in favour of the assessee. The appellant has made out a prima-facie case for waiver of pre-deposit of the amounts involved. Application for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till the disposal of the appeal.(Para 4).

  • STO 2009 CESTAT 1562
  • Service Tax: Erection, Commissioning or Installation Services" during the period from 10.9.2004 to 31.3.2007: Abatement of 67% under the Notification No. 19/2003-ST dated 21.8.2003: Penalties: In this case, there is no dispute about the liability to pay service tax and interest as per the observation by the Commissioner (Appeals) in his order and appellant submitted that they had paid service tax under protest. Notification No. 19/2003-ST dated 21.8.2003 implies that gross amount charged from the customer shall include the value of Plant, Machinery and Equipment, parts and any other material sold by the service provider. There is no basis to interpret the notification to mean that if the service provider has not sold the material to the client but has used them while providing services either capital equipment or consumables, exemption is not available. The interpretation given by the lower authorities would mean that it is absolutely necessary to sell the goods to avail exemption. In view of the above, there is no fault with the appellants if they entertain bonafide belief that they are eligible for Notification and paid service tax by availing benefit. The service tax liability and interest thereon has not been challenged at all. Therefore, the only aspect to be examined is whether suppression of facts/mis-declaration should have been invoked or not in this case and penalty under Section 78 is imposable. In view of the above interpretation to the Notification which would mean that appellant would interpret the notification differently, penalty under Section 78 of Finance Act, 1994 cannot be upheld and is accordingly set aside. The department's appeal regarding imposition of penalty under Section 76 also fails in view of the observations made above since as per provisions under Section 73 of Finance Act, 1994, where service tax and interest is paid prior to issue of show cause notice, no further action is called for. Penalty under Section 77 has been imposed for late filing return which has to be upheld in view of the fact that return has been filed late. (Para 2,3).

    Appeals disposed off.

  • STO 2009 CESTAT 1373
  • Service Tax: Commercial or Industrial Construction' services during April 2005 to September 2005: Waiver of pre-deposit: The contention of the assessees that they are entitled to the benefit under Notification No. 12/2003-ST dated 20.6.2003 is also not prima facie tenable and cannot be considered at this stage not only because such argument was not raised before either of the authorities below and has been raised for the first time in the appeal before the Tribunal but also for the reason that the notification is subject to fulfillment of certain conditions and prima facie there is nothing on record to show such fulfillment.(Para 2,3).

    Pre-deposit ordered.

  • STO 2009 CESTAT 1147
  • Service Tax: Erection installation and commissioning of service: Abatement from taxable value: Scope: The appellants claimed the benefit of Notification 12/03 ST dated 20th June, 2003 before the adjudicating authority which provides the abatement towards the value of sale of goods and materials. The applicants failed to produce such details. Therefore, the demand was rightly made. Notification 19/03-ST provides that the service tax shall be calculated on the value which is equivalent to 33% of the gross amount charged from the customer in case there is contract for supply of machinery and commissioning or installation. If this benefit of the Notification is allowed, the applicants are only liable to pay service tax of Rs.6.20 Crores. The appellants already paid of Rs.4.90 Crores. Therefore, the remaining liability comes to Rs.1.30 Crores.(Para 3,4).

    Pre-deposit ordered.

  • STO 2009 CESTAT 922
  • Erection, Commissioning and Installation Service: Laying of pipeline is not covered under the service of "Erection, Commissioning and Installation". Pre-deposit of amounts of Service Tax is waived and recovery stayed.

  • STO 2009 CESTAT 520
  • Service Tax: Waiver of pre-deposit and stay on recovery: Prima facie, demand of tax is barred by limitation and Commissioner (Appeals) has set aside the penalty. In view of that, pre-deposit of tax is waived

    Stay allowed.

  • STO 2009 CESTAT 624
  • Demand: Stay: appellants informed their belief to the department that they would not be liable for Service Tax and further surrendered the registration certificate. In such circumstances, the departmental officers could have investigated the matter further and issued the show cause notice in time for the Service Tax: Recovery stayed.

  • STO 2009 CESTAT 362
  • Service Tax: Commissioning or installation service: Activity of installing systems for “heating, ventilation or air-conditioning" and related work during the period from 1.7.2003 to 15.06.2005: Scope and liability: The services relating to heating, ventilation or air-conditioning has been specifically brought into the service tax net w.e.f. 16.06.2005. The amendments made effective from 16.06.2005 are also not in the nature of clarification. Further, in similar circumstances, the Tribunal in the case of Firepro Systems Private Limited Vs. CCE reported in STO 2008 CESTAT 76 has held that the service tax on Fire Proofing service will be effective only from 16.06.2005. Under these circumstances, the applicant has made out a prima facie case for waiver of the dues(Para 5,6).

    Stay granted.

  • STO 2009 CESTAT 365
  • Composite Contract: Appellants paid service tax separately under Construction Service and Erection, Commissioning services: Department wants to combine both services under Erection, Commissioning and deny 67% abatement: Plea if department itself states that composite contract cannot be vivisected, service tax paid should be refunded: Prima facie found in favour of the appellants: Pre deposit waived.

  • STO 2009 CESTAT 64
  • Composite Work Contract: Adjudicating authority  confirming service tax demand on the activity of Installation and Commissioning though  it was a composite work contract . Stay Granted as  Issue Prima-facie covered in favour of the appellant in light of Daeliam Industrial Co. : STO 2003 CESTAT 9 and Diebold Systems (P) Ltd. vs. CST, Chennai : STO 2007 CESTAT 1077.

  • STO 2008 CESTAT 531
  • Erection, Commissioning & Installation Service: Works Contract Service: Sub-contractor demanded service tax: Appeal of main contractor for the same demand pending: Stay granted.

  • STO 2008 CESTAT 76
  • Fire Proofing service: Fire Proofing service are rightly taxable under the category of ‘Erection, Commissioning or Installation’ services only w.e.f. 16-6-2005 and not prior. Since the legal position with regard to the levy of Service Tax on Erection, Commissioning, Installation, etc. was not very clear and there were different interpretations, the justification of the longer period in this case cannot be sustained.

  • STO 2008 CESTAT 60
  • Erection, Commissioning or Installation Service : Applicant contested the demand on the ground that they had done only erection work hence are not covered under “Erection, Commissioning or Installation Service”. On going through work contract it was found that the same was for erection and also trail running of cooler and kiln. Not a fit case for total waiver of amount of service tax.

  • STO 2007 CESTAT 1161
  • Contract to Erect, Install and Commission: A mere contract to erect, install and commission any machinery is not leviable to service tax as it is an engineering contract executed by a contractor and not by a consulting engineer. Appellants not liable to pay the service tax as consulting engineer in view of the decision of the Tribunal in the case of Daelim Industrial Co. Ltd. Post clearance activity of installation commissioning done on the request of the customer and sometimes only advise given by appellants not to be treated as part of manufacturing activity. These activities cannot be considered as integral to setting up of a project on turnkey basis.

  • STO 2007 CESTAT 1409
  • Erection :  With effect from 16-6-2005 installation of electrical devices including wiring or fittings included in the definition of erection, commissioning or installation under Clause 39a of the Finance Act, 2005. Appellants not liable to pay any service tax for earlier period.

  • STO 2007 CESTAT 1399
  • Erection, Commissioning & Installation : Installation of electric fittings and electric wiring of plant. For the period prior to 16.6.2005 the issue is covered by Tribunal’s decision by Final Order No. 1258/2007 dated 30-10-2007 [2008 (9) S.T.R. 497 (Tri.-Bang.) = STO 2007 CESTAT 1230], holding that the same activity is not covered under the category of commissioning, installation and erection.

  • STO 2007 CESTAT 1345
  • Refund : Commissioning or Installation services would not be covered in the category of “consulting engineer services”. These services became taxable from 1.7.2003. Issue already decided by Tribunal in earlier decisions.  Appellants claim for refund accepted with consequential relief.

  • STO 2007 CESTAT 1342
  • Work Contract : Appellants entered into work contract for supply, erection, installation and commissioning of air conditioning plant. 80% to 90% of the work contract value attributed to the goods supplied by the appellants. The demand of service tax on the entire amount received under the contract is not at all justified. Issue decided in favor of the appellants by the Tribunal earlier, Bench bound to follow the ratio of its earlier Order. Demand set aside.

  • STO 2007 CESTAT 434
  • Central Excise: Cenvat credit on services used at the site of the windmills: If it is the case of generation of electricity with the help of the windmills within the factory premises, there should be no doubt about extending service tax credit claimed by them. In this case, the electricity is being generated in windmills far away from the factory premises. The electricity as such is not excisable. The electricity generated by them is surrendered to the Electricity Board. The quantum of electricity which is going to be used by them need not be exact quantity of electricity produced in their windmills. The services used at the site of the windmills cannot be held as input services by the unit in Jamnagar. As electricity is not excisable, the Cenvat credit is not available even at the premises of the windmills. Cenvat credit claimed is inadmissible. However, since this is an issue of interpretation, there is no justification for imposition of penalty.(Para 6,7).

    Appeal rejected except penalty.

  • STO 2007 CESTAT 564
  • Service Tax: Erection, Commissioning and installation service: Scope and liability: In terms of the said cited judgment rendered in the appellant's own case reported in STO 2006 CESTAT 194, a similar issue was dealt with and the demands were set aside by following the ratio of the Tribunal ruling rendered in the case of CCE v. Larsen & Toubro Ltd. - STO 2006 CESTAT 296. There are other judgments also which has been followed as noted in the citation. In view of the appellant's issue being covered in their favour, the stay application is allowed unconditionally(Para 4).

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 325
  • Stay: Work Contract Service: turn key contracts entered into for execution, would not get covered under Consulting Engineering Services.

  • STO 2007 CESTAT 22
  • Service Tax: Installation and commissioning: Demand: The items in question are portable/movable equipment requiring no erection and commissioning. On the entire value of the machine, excise duty has been paid. Contention being that, if at all, a portion of the value is to be treated as cost of installation/commissioning, the demand can be made only after abetting the excise duty paid on the same. The basis of demand does not appear to be, prima facie, sustainable.(Para 2,3).

    Stay application allowed.

  • STO 2007 CESTAT 438
  • Service Tax: Engineering Consulting Service: Scope: That erection, commissioning and installation shall not be liable to Service Tax under the Heading of Engineering Consulting Service for consideration received from M/s. Mecon India Ltd. as a sub-contractor for the sub-contract awarded by M/s. Mecon India Ltd. for construction of 18 Bar Mill Project for M/s. NISCO. The appellant relied on the decision of the Tribunal in the case of Commissioner of Central Excise, Bangalore reported in STO 2005 CESTAT 6 as well as CBEC's Circular No. 79/9/2004-S.T., dated 13-5-2004, which modified the earlier Circular No. 49/11/2002-S.T., dated 18-12-2002 and pleaded that there shall be no liability on the appellant under the Finance Act, 1994 under the Heading "Consulting Engineering Service". The consideration received for erection, installation, commissioning, are not covered under the category of "Consulting Engineer Service" and Tribunal has already held in two successive cases reported in STO 2005 CESTAT 6 (supra) and Commissioner of Central Excise, Rajkot v. Gujarat Goldcoin Ceramics Ltd. reported in STO 2005 CESTAT 268 that charges for erection, installation and commissioning, are not embraced by the category of service called "Consulting Engineer Service" for the period prior to July, 2003,(Para 1,2,4).

    Appeal allowed.

  • STO 2007 CESTAT 194
  • Stay: Commissioning or installation Service: indivisible service rendered by a person to his customer under a turnkey contract relating to ATMs was not to be taxed. Prima facie case made out. Pre deposit waived.

  • STO 2007 CESTAT 199
  • Service Tax: Manufacturing and sale including erection of the elevators/lifts under composite contracts: Scope and liability: The composite charges were levied on the appellants for all the activities. They had paid the service tax for the maintenance and repair services. The Apex Court in the case of Kone Elevators (India) Ltd. [2005 (140) STC 22 (S.C.)] has taken a view that the activity is not erection but is a "sale" and it is not "works contract". Tribunal judgment rendered in the case of Daelim Industrial Co. Ltd. - STO 2003 CESTAT 9, which has been affirmed by the Apex Court, wherein it has been held that the contract which was primarily basis wherein cannot be considered as consulting contract for levy of service tax. In view of these judgments, prima facie case in the assessee's favour.(Para 3).

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 222
  • Cargo Handling Service: Perusal of the agreement makes it clear that this is not an agreement for hiring of pay loaders. It includes all aspects of handling coal. Applicant directed to make deposit of the service tax demanded.

  • STO 2006 CESTAT 194
  • Work Contract: A consolidated bill for supply, installation and commission of Air Conditioning System was issued by the assessee. It appeared that they had short paid the levy by not taking into consideration the erection, installation and commissioning of Air Conditioning Systems and labour component therein, therefore, the service tax was re-calculated and demands confirmed. It was held that work contract cannot be vivisected and part of it cannot be subjected to duty. Demand set aside.

  • STO 2006 CESTAT 923
  • Service Tax: Erection Commissioning or Installation service: Scope and liability: The activity on which short levy has been initiated does not come within the category of "erection, commissioning or installation", as the same relates to work contract. In an identical case, the Tribunal has held the matter in assessee's favour holding that element of work contract is not liable for Service Tax as held in the case of Larsen & Turbo Ltd. v. CCE STO 2003 CESTAT 30 and CCE & Customs v. Larsen & Turbo Ltd. [2006] 4 STT 12 (Mum. - CESTAT); Daelim Industrial Co. Ltd. v. CCE STO 2003 CESTAT 9 The decision rendered in the case of Daelim Industrial Co. Ltd. (supra) has been affirmed by the Apex Court as reported in STO 2003 SC 98 (Para 1,2).

    Pre-deposit waived and stay granted.

  • STO 2006 CESTAT 4
  • Consulting Engineer's Services: Respondent rendering services as consultant engineer. Erection and commission of fire-fighting equipment which involves technical skill are covered under ambit of 'technical assistance'. Held that nature of services rendered by the respondents within the frame work of a "consulting engineer's services". Therefore, order of Commissioner (Appeals) set aside and Order-in-Original restored however  penalty reduced.

  • STO 2005 CESTAT 231
  • Consulting Engineer Service: Stay of Recovery: The appellants have made out a strong prima facie case on the strength of Board's Circular. Commissioning and installation services were not covered in the category of Consulting Engineers' Service. Accordingly, waiver of pre-deposit and stay of recovery; in respect of tax as well as the amount of penalty.

  • STO 2005 CESTAT 114
  • Erection Commissioning or Installation Service: The party cannot say that his main job is manufacture and commissioning is only incidental, therefore he is not a commissioning agency. If this argument is accepted, then the very purpose in levying service tax would be defeated. The appellant is liable for service tax. Since there is no mala fide, the penalty is set aside.

  • STO 2005 CESTAT 113
  • C.E.A. No. 54 of 2006, decided on 12-4-2011 Penalty - Non-payment of Service tax - Reasonable cause for non-payment - Assessee undertaking manufacture and also erecting and commissioning their finished products - Customer charged for services rendered as well as value of goods - Excise duty paid on whole value including that for services and liability under Service tax disputed till Tribunal - Tax paid after Tribunal order in favour of Revenue - No wilful attempt to evade - Commissioning, installation and erection work brought under tax net only from 1-7-2003 and tax claimed for period 1-7-2003 to 30-9-2003 - Period transitional and benefit of doubt to be given - Reasonable cause for non-payment in view of Section 80 of Finance Act, 1994 - No infirmity in Tribunal’s order setting aside penalty. [para 6]

    Tax liability - Service tax liability when Central Excise duty paid - Assessee paying Excise duty on whole value including value of goods and that of services rendered - Contention that there cannot be levy of tax under two Parliamentary legislations - Excise duty levied on aspect of manufacture and Service tax levied on aspect of service rendered - Tax not paid twice. [para 6]
    Appeal dismissed.

  • STO 2005 CESTAT 334
  • Service Tax: Liability of tax on authorised agents of the service provider company: Demand: On the basis of Clauses of the Agreement, it reveals that the appellants were to bear all the expenses relating to the export, internal revenue sales or other taxes, duties, customs etc. and if these charges were borne by the service provider company, then the appellants were liable to reimburse the company. From this clause, it is difficult to conclude that the appellants were appointed as their authorised agents to discharge the service tax liability on their behalf. Therefore, service tax for the period in dispute could only be legally claimed/recovered from the service provider company or his authorised agents in India and not from the appellants, who is the recipient of service.(Para 3).

    Appeal allowed.

  • STO 2005 CESTAT 268
  • Erection, Installation & Commissioning : the charges for erection, installation and commissioning were not covered under the category of "Consulting Engineering Services" leviable for the period in dispute which was prior to July, 2003. Indian company is the service receiver and it is only with effect from 16-8-2000 that a service receiver was made payable to service tax.

  • STO 2005 CESTAT 163
  • Service Tax: consulting engineer services: Demand: C.B.E. & C Circular No. 79/9/2004-ST, dated 13-5-2004 specifically mentioned that erection, installation and commissioning are not covered under consulting engineering services.(Para 4).

    Un-conditional stay granted.
     

  • STO 2005 CESTAT 380
  • Commissioning or Installation Service: The commissioning or installation services would not be covered under Service Tax in the category of Consulting Engineer Services.

  • STO 2004 CESTAT 74
  • Service Tax: Tax on commissioning and installation services: Waiver of pre-deposit and stay: By Circular No. 79/09/2004-S.T., dated 13-5-2004, Board clarified that charges for erection, installation and commissioning are not covered under consulting engineer services and will be separately taxable under the relevant entry which was introduced in July 2003. Since the services in question were rendered prior to July 2003, pre-deposit waived.(Para 3).

  • STO 2004 CESTAT 69
  • Service Tax: Waiver of pre-deposit: Applicant submitted that there is a duplication of duty of Rs. 37.20 lakhs and that maximum they would be liable to pay, even if the case is decided against them, Rs. 7.91 lakhs. However, the lower authority has not determined it. The applicant submits that since one of the agreements is for erection and commissioning assistance, as per Circular No. 79/9/2004-S.T. dated 13-5-2004 the work of erection and commissioning of installation services does not come under the purview of Consulting Engineer services and therefore, service tax would be further reduced(Para 2,3).

    Partial pre-deposit ordered.

  • STO 2004 CESTAT 136
  • Service Tax: Activity of Erection and installation of machinery whether fall under the heading 'Consulting Engineer Services': Scope and Liability: The Board's Circular No. 79/9/2004-S.T., dated 13-5-2004 carifying the point that the activities of erection, installation and commissioning are not covered under the category of Consulting Engineer Services and commissioning or installation service will be separately taxable under relevant entry, would apply to the facts of this case. The period involved is from 7-7-1997 to 31-3-2001 which is earlier to the introduction of heading Commissioning and Installation Services on 1-7-2003. .(Para 3).

    Pre-deposit waived, stay allowed.

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