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Works Contract Service [Sec 65(105)(zzzza)]
Effective upto 30th June, 2012
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Landmark Service Tax Judgment - Works Contract Service

Introduced With Effect From 1st June 2007
 
Contents
Scope
Exemption
Clarification
Relevant Notifications / Circulars
Landmark Judgements
News
Accounting Code
Service Tax 00440410
Interest 00440411
Penalty 00441457
 
DEFINITION:
According to Section 65 (105) (zzzza), any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams, is a taxable service;

Explanation.—For the purposes of this sub-clause, “works contract” means a contract wherein,—

(i) Transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and iswwatches

(ii) Such contract is for the purposes of carrying out,—

(a) Erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or

(b) Construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or

(c) Construction of a new residential complex or a part thereof; or

(d) Completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or

(e) Turnkey projects including engineering, procurement and construction or commissioning (EPC) projects;

 
SCOPE:
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The taxable service is to levy service tax on services involved in the execution of a works contract. It may be noted that under this service only the following works contracts wherein transfer of property in goods involved in execution of such works contract is leviable to VAT/sales tax, are covered, namely :-

(i) works contract for carrying out erection, commissioning or installation

(ii) works contract for commercial or industrial construction

(iii) works contract for construction of complex

(iv) works contract for turnkey projects including Engineering Procurement and Construction or Commissioning (EPC) projects.

Works contract in respect of specified infrastructure projects namely roads, airports, railways, transport terminals, bridges, tunnels and dams are specifically excluded from the scope of the levy. Rolex Replica

Valuation of Works Contract Service:

Taxable value under this service is that part of the value of the works contract which is relatable to services provided in the execution of a works contract. Such value is to be determined on actual basis based on the records maintained by the assessee. However, it is proposed to give an option to an assessee to opt for a composition scheme. Under the composition scheme, the assessee is required to pay 4% of the total value of the works contract as service tax. Assessee opting for the composition scheme is not entitled to avail Cenvat credit of inputs required for use in the works contract. Valuation of works contract and details of the composition scheme will be notified separately. [Please Refer: The Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007.]

Rule 2A of The Service Tax (Determination of Value) Rules, 2006 clarifies about Determination of value of services involved in the execution of a works contract.

 
SERVICE TAX EXEMPTIONS:
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(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

 
CLARIFICATION:
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ISSUE 1: Whether Cenvat credit of duty paid on capital goods and service tax paid on input services can be taken by a service provider who opts to pay an amount equivalent to 4% of the gross amount charged for the works contract instead of paying service tax at the rate specified in section 66, under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, notified vide Notification No. 32/2007-Service Tax dated 22-05-07?

ANSWER 1: Rule 3(2) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 provides that the provider of taxable service opting to pay service tax under the composition scheme is not entitled to take Cenvat credit of duty on inputs, used in or in relation to the said works contract, under the provisions of the Cenvat Credit Rules, 2004. There is no restriction under Notification No. 32/2007-Service Tax dated 22-05-07 to take Cenvat credit of duty paid on capital goods and service tax paid on input services.

ISSUE 2: Services provided in relation to execution of a works contract is leviable to service tax [section 65(105)(zzzza)]. VAT/sales tax is payable on the transfer of property in goods involved in the execution of a works contract.

Service tax is leviable on the value equivalent to the gross amount charged for the works contract less value of the transfer of property in goods involved in the execution of the works contract which is leviable to VAT/sales tax [Rule 2A of the Service Tax (Determination of Value) Rules, 2006]. Whether or not, excise duty paid on goods, subjected to levy of VAT/sales tax under works contract service, can be taken as credit under the Cenvat Credit Rules, 2004?

ANSWER 2: Value for the purposes of levy of service tax under works contract service does not include the value pertaining to transfer of property in goods involved in the execution of a works contract leviable to VAT/sales tax. Works contract service provider is, therefore, not eligible to take credit of excise duty paid on such goods involved in the execution of works contract.

ISSUE 3: Services provided in relation to execution of works contract is leviable to service tax w.e.f. 01-06-07 [section 65(105)(zzzza)].

Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 provides option to pay service tax @ 4% of the gross amount charged for the works contract. However, the service provider opting for composition scheme for payment of service tax should exercise the option prior to payment of service tax.

The issue pertains to, -

(i) Contracts entered into prior to 01-06-07 for providing erection, commissioning or installation and commercial or residential construction service, and

(ii) Service Tax has already been paid for part of the payment received under the respective taxable service.

Whether in such cases, the service provider can revise the classification to works contract service from the respective classification and pay service tax for the amount received on or after 01-06-07 under the Composition Scheme?

ANSWER 3: Prior to 01-06-07, service provider classified the taxable service under erection, commissioning or installation service [section 65(105)(zzd)], commercial or industrial construction service [section 65(105)(zzq)] or construction of complex service [section 65(105)(zzzh)], as the case may be, and paid service tax accordingly. The contract for the service was a single composite contract. Part of service tax liability corresponding to payment received was discharged and the balance amount of service tax is required to be paid on or after 01-06-07 depending upon receipt of payment.

Classification of a taxable service is determined based on the nature of service provided whereas liability to pay service tax is related to receipt of consideration. Vivisecting a single composite service and classifying the same under two different taxable services depending upon the time of receipt of the consideration is not legally sustainable.

In view of the above, a service provider who paid service tax prior to 01-06-07 for the taxable service, namely, erection, commissioning or installation service, commercial or industrial construction service or construction of complex service, as the case may be, is not entitled to change the classification of the single composite service for the purpose of payment of service tax on or after 01-06-07 and hence, is not entitled to avail the Composition Scheme.

 
SERVICE SPECIFIC EXEMPTION:

Service of works contract provided in relation to construction of authorised port or other port is exempt from levy of Service Tax.

 
RELEVANT SERVICE TAX NOTIFICATIONS:
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Service Tax Notification No. 11/2011-S.T., dated 01-03-2011. (Effective from 01-03-2011) Exemption to works contract service rendered within a port or other port
Service Tax Notification No. 10/2011-S.T., dated 01-03-2011. (Effective from 01-03-2011) Exemption to works contract service rendered within an airport
Service Tax Notification No. 06/2011-S.T., dated 01-03-2011. (Effective from 01-03-2011) Exemption to execution of works contract in relation to Residential Complex Services under Specified Government schemes
Service Tax Notification No. 41/2009-S.T., dated 23-10-2009. (Effective from 23-10-2009) Exemption for services provided in respect of canals
Service Tax Notification No. 23/2009-S.T., dated 07-07-2009. (Effective from 07-07-2009) The rules amended to add more conditions for opting composition scheme for payment of service tax
Service Tax Notification No. 32/2007-S.T., dated 22-05-07. The Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007.
Service Tax Notification No. 25/2007-S.T., dated 22-05-2007. Exemption Notification Exemption for service in relation to construction of port or other port.
 
RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES:
Service Tax CBEC Instruction Letter (F. No. 334/3/2011-TRU), dated 28-02-2011. Clarification regarding the changes made by the Finance Bill, 2011
Service Tax CBEC Circular No. 128/10/2010-S.T., dated 24-08-2010. Clarification regarding taxability on ongoing works contracts entered into prior to 01-06-2007
Service Tax CBEC Circular No. 123/5/2010-TRU, dated 24-05-2010. Clarification regarding applicability of service tax on laying of cables under or alongside roads and similar activities
Service Tax CBEC Instruction Letter (334/13/2009-TRU), dated 06-07-2009. Clarification regarding the changes made by the Finance Bill, 2009 including those in the Works Contract Services Composition Rules
Service Tax CBEC Instruction Letter (File No. 334/1/2007-TRU), dated 28-02-2007. Explanation regarding changes brought by the Finance Bill, 2007 including design services
Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 Provisions governing the composition scheme
Service Tax (Determination of Value) Rules, 2006 Rules in relation to valuation of taxable service
Service Tax Circular No. 96/7/2007-S.T., dated 23-08-2007.
Service Tax CBEC Instruction Letter (File No. B1/16/2007-TRU), dated 22-05-2007.
 
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Case Laws Related

  • STO 2014 CESTAT 58
  • Service Tax: Works contract service to the Delhi University for creation of infrastructure by way of commercial or industrial construction for facilitating the Commonwealth Games, 2010; for construction of godowns and shops etc. for the Agricultural Produce Market Committee (APMC for short); for creation of infrastructures in bus terminals for Road Transport Corporations in several States: Scope and liability: In respect of services provided to the Delhi University for creation of infrastructure for facilitating Commonwealth Games and services provided to several Road Transport Corporations for creation of infrastructure in transport terminals, the petitioner claims immunity from service tax liability under the taxable works contract service on the ground, inter alia, that works contract services provided in respect of transport terminals are excluded from the scope of the taxable service in the main part of the definition of works contract service, in Section 65 (105) (zzzza) itself and that the definition of works contract in the said provision in sub-clause (b) viz. construction of a new building or a civil structure is a taxable service only when the same is primarily for the purpose of commerce or industry; and provision of works contract services for games or sports organized under the aegis of the Government would be amount to facilitating a public utility rather than for furtherance of business or commerce. For this contention, reliance is placed on the Final Order of learned Division Bench of this Tribunal in B.G. Shirke Construction Technology Pvt. Ltd. Vs. CCE, Pune-III STO 2013 CESTAT 518. This decision, prima facie, supports the contention of the petitioner with regard to the claim for exclusion of service tax liability on works contract service provided for Commonwealth Games, 2010. The works contract services provided for creation of bus terminal infrastructure for several Road Transport Corporations is also, prima facie, outside the purview of the taxable service, in view of the provisions of Section 65(105)(zzzza). However, no prima facie case made out for exclusion from service tax liability in respect of works contract services provided for APMC since facilitation of marketing activities by market committees is clearly for furtherance of business and commerce.(Para 1,2).

    Partial pre-deposit ordered.

  • STO 2014 CESTAT 56
  • Service Tax: Works contract services/ Commercial or industrial construction service, during 01/06/2007 to 31/03/2011 for different departments of several State Governments: Activity of supply and construction of pipelines for supply of drinking water, evacuation of drainage and irrigation: Scope and liability: Since the works contract service provided is towards construction of pipeline falling within sub-clause (b) of Section 65(105)(zzzza) of the Finance. Act, 1994 and the service was provided not for business or industrial purposes but for facilitating Governmental works of drinking water supply, irrigation and drainage, these works and the services provided thereunder are excluded from the purview of works contract service in view of the restricted trajectory of sub-clause (b). The contrary conclusion in the impugned order, that these works fall within sub-clause (e) of Section 65(105)(zzzza), is prima facie unsustainable. This is the prima facie view while granting waiver of predeposit and stay. (Para 2).

    Commercial or industrial construction service: Petitioner have entered into two contracts, with NTPC. One contract is exclusively for supply of manufactured goods and the other is for rendition of services under the composite contract involving incorporation of goods and rendition of services. The two contracts are however and in terms of the contracts thereunder, mutually dependant and connected. The adjudicating authority, on the basis of the Explanation to Rule 3(1) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, computed the value of the transaction covering the two contracts (viz. the supply portion and the goods & services portion) for assessment of service tax, after granting the benefit of the composition scheme. The Explanation to Rule 3(1) of the 2007 rules was introduced vide Notification No. 23/2009-ST dt. 07/07/2009. Execution of the works contract had commenced prior to 07/07/2009 and receipt of the consideration for providing such works contract service to NTPC was also prior to 07/07/2009. The inclusion of the value of the transaction covered by the supply contract for assessing the service tax liability though after granting the benefit of the composition scheme is therefore, prima facie, unsustainable. (Para 3,4,5).

    Partial pre-deposit ordered.

  • STO 2014 CESTAT 45
  • Service Tax: Works Contract service, namely, Turnkey Projects including engineering, procurement and construction or commissioning (EPC) projects: Works were executed for the Govt. of Andhra Pradesh for supply of drinking water, whether these were not primarily for commerce or industry but for public utility and are excluded from the scope of the taxable service in sub-clause (b) of Section 65 (105) (zzzza): Scope: Substantially similarly nature of works came up for consideration in Stay Application No.309/2012 in ST Appeal No. 501/2012 and it was held that works were for pipe-line construction since the pipe-line construction was for provision of drinking water supply and irrigation, the works were outside the ambit of the taxable service enumerated in 65 (105) (zzzza) (b). For the reasons alike as recorded there is a strong prima facie case in favour of the petitioner and grant waiver of pre-deposit in full(Para 4,5).

    Stay granted.

  • STO 2014 CESTAT 55
  • Service Tax: Works contract service during October 2009 to September 2010: Demand: Prior to 23/10/2009, the rendition of works contract service in relation to canals, irrespective of whether the canal works were for the purpose of commerce or industry or otherwise was exigible to service tax. Such liability to tax came to be eclipsed only on the exercise of the power of exemption under Section 93(1) of the Act by issuance of Notification No.41/2009-ST. This Notification in clear terms exempts the taxable services referred to in Section 65(105)(zzzza) from the whole of the service tax leviable thereon when provided in the circumstances referred to in the Notification. It is therefore, clear that the exemption Notification halts, as it were, the trajectory of the levy of tax on the taxable event occurring on and after issuance of the Notification. It is axiomatic that an exemption Notification issued under Section 93(1) has no retrospective operation or reach. In the circumstances, service provided prior to 23/10/2009, the date of Notification No.41/2009-ST are not immune to the levy of service tax on the mere circumstance that the consideration for the earlier provided service was received after the date of issue of this Notification.(Para 3).

    Lift irrigation projects: An amount of Rs. 20,09,246/-out of the total demand confirmed is attributable to consideration received on works contract services proved in respect of Rajiv Sagar Lift Irrigation Project. The petitioner's claim for exemption on this aspect predicated on the basis of exemption Notification No.41/2009-ST, was rejected by the adjudicating authority on the ground that lift irrigation schemes are outside the purview of canals Which are the subject matter of Notification No.41/2009-ST dt. 23/10/2009. The principles discernible from the interim order dt. 01/10/2013 in stay application ST/Stay/2429/2012 in appeal ST/3348/2012 and in stay application ST/Stay/25449/2013 in appeal ST/25369/2013, passed by the Bangalore Bench of the Tribunal wherein it was clearly and with respect rightly, held that works contract works undertaken in relation to canals would include pump houses and other facilities erected for lifting the water from lower to higher level of the canals, as would be the case in lift irrigation projects. For reasons alike as recorded in the interim order of this Tribunal there is a strong prima facie case in favour of the appellant/petitioner for waiver of the demand(Para 4,6).

    Pre-deposit ordered.

  • STO 2014 CESTAT 4
  • Service Tax: Service tax under Works Contract Services: Tax liability on the difference in the purchase value of the good and the value at which the said goods are sold by the appellant to its customers: Demand: Scope: The issue involved is whether the disputed contracts entered into by the appellant can be vivisected and whether the sale value of the goods charged by the appellant from its customers represent only the price of the goods or also include consideration for performing a service also. It is the argument of the appellant that the entire price charged from the customers include only value of the goods in property and needs exclusion from the payment of service tax as per the provisions of Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006. On the other hand adjudicating authority in Para 15.52 has held that provisions of Rule 2A above is not applicable as the VAT/CST has not been paid by the appellant on the actual value of transfer of property in goods. The issue is contentious one and needs deeper consideration, which can be gone into detail at the time of final hearing of the matter.(Para 4).

    Pre-deposit ordered.

  • STO 2013 CESTAT 1191
  • Works Contract: After going through the sample copies of the invoices and contracts relating to pure supply of materials, prima facie, the Applicant have raised separate invoices for supply of equipments/parts on which VAT had been discharged by them.

  • STO 2013 CESTAT 1221
  • Works Contract: Composition Scheme: Unless the procedure as prescribed under the relevant rules is followed, according to which the appellant was required to opt for composition scheme before making the payment of tax, they cannot avail the benefit: Directions issued for pre deposit.

  • STO 2013 CESTAT 1083
  • Works Contract: Construction of highway, toll plaza, rest rooms, etc to be considered essential for construction of road: Toll plaza, rest room for staff working toll plaza would be destroyed once the purpose is Over: On the basis of Tribunal’s decision in another case, pre deposit waived.

  • STO 2013 CESTAT 635
  • Works Contract Service: Demand: Stay: Appellants claiming coverage under WCS: Contesting the issue on merits: More than service tax confirmed stands paid: Pre deposit of balance amounts waived.

  • STO 2013 CESTAT 778
  • Construction of Commercial Complex: Works Contract: CBEC Circular not examined: Matter remanded for proper classification.

  • STO 2013 CESTAT 714
  • Works Contract Service: Vivisection of composite contract: Prior to 1.6.2007: A works contract can be vivisected even prior to 01/06/2007 and the service portion discernible in the contract can be subjected to levy of service tax and in the present case, since the discernible service is "erection, installation and commissioning", the said activity is leviable to service tax under section 65 (105) (zzd) read with section 65 (39a)/65 (28) as they stood at the relevant time prior to 01/06/2007 and under Section 65 (105) (zzzza) on or after 01/06/2007.

  • STO 2013 CESTAT 793
  • Construction of Residential Complex: Whether taxable under Works Contract service prior to 01.06.2007: Directions issued for pre deposit.

  • STO 2013 CESTAT 471
  • Works Contract Service: Stay: Out of Rs.2.49 crore, appellants already paid Rs.2.14 crores and Rs.33.26 towards interest: Considered as sufficient: Pre-deposit of balance amounts waived. 

  • 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 1093
  • Works Contract: Value of material sold: Demand: Neither they have examined what was the work executed and the nature of activity with elements of goods and services involved. The table at page 2 of the appellate order shows that there was used of the goods. Whether it was a repair or renewal work or execution of work contract needed thorough examination to reach a proper conclusion on the basis of the material tested under law. That exercise is not carried out: Matter remanded.

  • STO 2013 CESTAT 829
  • Demand: Works Contract Service: Stay: Subcontractor: It is not in dispute that the letters of the main contractors acknowledging their tax liability on the subject works were produced by the appellant before the adjudicating authority. These letters clearly spelt out the tax liability of the main contractors and therefore it was open to the adjudicating authority to make enquiries to find out whether the main contractors had actually discharged their tax liability. In any case, it is not in dispute that the works undertaken by the appellant were a part of the works covered by the work orders received by the main contractors: Pre-deposit waived.

  • STO 2013 CESTAT 205
  • Demand: Stay: Works Contract: Service Tax liability under the works contract will come into effect from 01.06.007 and it cannot be covered in any earlier entries: Stay granted.

  • STO 2013 CESTAT 218
  • Works Contract: Commercial or Industrial Construction: Demand: Stay: If appellants made to pay service tax under CIC and not WC, they are eligible for abatement of 67% and accordingly liable to pay tax of Rs. 4.50 lakhs, out of which, they have already deposited an amount of Rs.3.68 lakhs: Stay granted from balance amounts.

  • STO 2013 CESTAT 543
  • Commercial or Industrial Construction: Works Contract: On going project not eligible for Works Contract Composition Scheme: Stay: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 578
  • Works Contract Service: Abatement: Department allowed abatement of 2/3rd of value, appellants claim it to be 85%: Matter remanded for verification.

  • STO 2012 CESTAT 994
  • Works Contract Service: Value of goods and services: goods which were deemed to be sold in the execution of works contract that shall not enter into the purview of the levy of the service tax.

  • STO 2012 CESTAT 900
  • Works Contract v/s Erection, Commissioning & Installation, Commercial or Industrial Construction Service, etc: Works Contract service was introduced for the purpose of convenience of the assessees and also it was clearly understood that many of the services which were being levied to Service Tax under other headings may come under Service Tax levy under works contract service later

    Valuation: Supply of free material, the clarification issued by the Board in 2009 relates to Works Contract only and cannot be applied for the earlier period.

  • STO 2012 CESTAT 849
  • Construction Service: Works Contract: Input Service Credit: Stay: Large amount of credit earned lying unutilized: Stay granted.

  • STO 2012 CESTAT 765
  • Commercial or Industrial Construction Service: Works Contract: Post 1.6.2007 the appellants themselves classified the services under Works Contract and paid service tax: Prior to 1.6.2007 period involved: In similar situation, stay granted in other cases: Stay granted from pre deposit.

  • STO 2012 CESTAT 508
  • Construction Service: Works Contract Service: Prima facie case not made out: Directions issued for making pre deposit.

  • STO 2012 CESTAT 583
  • Turnkey Project: Demand issued on entire value under Works Contract Service: Stay: even if project is a turkey contract then also the value of material supplied is to be excluded from the value of the taxable services and if the same is excluded then prima facie on the remaining part of the services the service receiver has already paid service tax : Prima facie case made out for waiver.

  • STO 2012 CESTAT 257
  • Commercial Construction Service: Works Contract Service: Averment that before 1.6.2007 the appellants were paying service tax under Commercial Construction service not factually true as appellants came into existence after 1.6.2007: Matter remanded.

  • STO 2012 CESTAT 228
  • Works Contract Scheme: Composition Scheme: where service tax has been paid in respect of a works contract, the eligibility to exercise an option to avail the benefits of the composition scheme under the 2007 Rules is excluded.

  • 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 2011 CESTAT 141
  • Service Tax: Erection, commission and installation services in respect of various turnkey contracts: Demand: Classification: Appellant before the adjudicating authority had specifically taken a plea that the contracts entered by them with various parties would squarely get covered under the definition of "work contract" under section 65 (105) (zzzza) which came into effect from 1.6.07. It is seen from the order in original specifically in para No. 31, the adjudicating authority has not given any reasoning to hold against the appellant on this point. They were discharging VAT liability as per work contract in respective States where the contracts were executed. and were filing returns with the authorities. It is established that Service Tax liability on works contract will come into force with effect from 1.6.2007, even if the activities undertaken may get covered under other services, and has settled that if the contract is understood as works contract, the service tax can be levied only from 1.6.07. In the stay petition on hand, there is no dispute that the contracts are understood as works contract by contracting parties.(Para 7). Therefore, the question of discharging Service Tax liability may not arise, as the demand is for period prior to 01.06.2007. In view of the foregoing, application for waiver of pre-deposit of amounts is allowed and recovery thereof is stayed till disposal of the appeal.(Para 8). 

  • STO 2011 CESTAT 189
  • Service Tax: Commercial or industrial construction service, "Construction of complex service and Works contract service: Demand: Waiver of pre-deposit: There is merit in the department's contention that the services provided by the appellant were taxable even during the period prior to 1.6.2007 on which admittedly, no Service Tax has been paid, as such the appellant have not established a case in their favour. Therefore, this is not a case for total waiver. On the payment of this amount within the stipulated period, the requirement of pre-deposit of the balance amount of Service Tax, interest and penalty would stand waived and recovery thereof stayed till the disposal of the appeal.

  • STO 2011 CESTAT 200
  • Service Tax: Works contract service: Demand: Waiver of pre-deposit: The work executed by the appellants is in respect of the irrigation system for the Government of Andhra Pradesh and is not for any commerce or industry. The Board vides its circular dated 15-9-2009 has clarified that infrastructure activities, which are concerned with welfare activity, for the citizens of this country has been excluded form the liability of Service tax. Therefore, complete waiver of pre-deposit of the dues is ordered and stay recovery thereof pending decision in the appeal.(para 5)

  • STO 2011 CESTAT 169
  • Service Tax: Service tax on freight amount: Consignment agent: Liability: Appellants are companies registered under the Companies Act and the consignment agents are partnership firms/companies. As such, both the appellants and the consignment agents fall under the category ‘person who are liable to pay service tax’. It is also not in doubt that the consignment agents are agents of the appellants engaged in the business of selling paper and paper boards on behalf of the appellants. The freight amounts are paid by the consignment agents and are deducted from the sale proceeds received from the ultimate buyers of the paper and paper boards. This position is also borne out from the Chartered Accountant’s certificates. Accordingly, it is not possible to hold that the appellants are paying the freight through their agents and are therefore liable to pay service tax. On the other hand, the consignment agents squarely fall under the category of persons who are liable to pay service tax since they have paid the freight amount themselves. The impugned orders are set aside and all the five appeals are allowed.(Para 5).

  • 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 67
  • Service Tax: Works Contract: Composition Scheme: Exercise of option: If option is not exercised in writing that does not see the light of the day. Therefore on the first count, the appellant prima facie fails to succeed. (para 3)

    Service Tax: Works Contract: Abatement:  Notification No. 1/2006-ST dated 1st March 2006.. So far as the second alternate argument is concerned that when the appellant appears as a work contractor, to claim appropriate abatement scrutiny of evidence cannot be ruled out. (para 4)

    Service Tax: Works Contract: Pre-deposit: The appellant to make pre-deposit of Rs. 30.00 lakhs. (para 6)

  • STO 2011 CESTAT 105
  • Service Tax : Works contract service under Section 65(105)(zzzza) of the Act : Demand : Waiver of pre-deposit: The issue involved in this case is whether the appellant is liable to pay Service tax on the services rendered by them by executing irrigation project which includes construction of Dam, canal, feeder system etc. Prima facie, the said services may be covered under the ‘works contract’. It is undisputed that the work executed by the appellant is in respect of the irrigation system for the Government of Andhra Pradesh and is not for any commerce or industry. (Para 5). CBEC Circular No. 123/5/2010-TRU dated 24.05.2010 in paragraph 2 clarified the scope of ‘Commercial or industrial construction services’, ‘Erection, commissioning or installation services’, ‘Works contract services’, ‘Site formation and clearance, excavation, earth moving and demolition services’.(Para 6). In the circumstances, complete waiver of pre-deposit is ordered and stay on recovery of the dues adjudged against the appellants in the impugned order, pending decision in the appeal.(Para 7). 

  • STO 2011 CESTAT 59
  • Service Tax: Works Contract Service: Remand: If the appellant has discharged the sales tax and VAT on the contracts entered into by him on which the service tax demanded, then the question of these contracts falling under the category of 'commercial or industrial construction service' and 'construction of complex service' would not arise as they may be covered under the 'works contract service'. Since this argument was not advanced before the adjudicating authority, it is fit to set aside the impugned order, keeping all the issue open, and remand the matter back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice. (para 6)

  • STO 2010 CESTAT 603
  • Service Tax: Construction of residential complex: Scope and liability: The owners of the land have received the constructed flats against which they have traded part of the value of the land and for remaining part of the value of the land they have received cash/cheque. As such, it cannot be held that no construction service has been rendered by the appellants in respect of the impugned constructed flats therefore, they have a case for complete waiver of the service tax. As regards the argument that the appellants have undertaken a works contract and that before a separate levy on the same has been imposed, no service tax can be levied on the service portion of the works contract, the Larger Bench of the Tribunal has already decided that the works contract can be vivisected even for the period prior to separate levy on such works contract and portion of the works contract can be subjected to service tax if the same is otherwise covered by a specific entry under the service tax law.(Para 5).

    Pre-deposit ordered.

  • STO 2010 CESTAT 557
  • Service Tax: Improvement / re-asphalting of the existing roads whether merits classification under 'Management, maintenance or repair' service as per definition under Section 65(64) of the Finance Act, 1994: Taxable event: Remand: The plea of the appellant's regarding the entire contract may get covered under the category of 'Works contract' needs to be examined by the Adjudicating Authority. The lower authorities themselves have recorded that the appellant has paid Karnataka State Sales Tax. Since the issue needs re-consideration by the Adjudicating Authority by looking into factual matrix, the impugned order is set aside and matter remanded to the Adjudicating Authority. Appeal is allowed by way of remand. (Para 5).  

  • STO 2010 CESTAT 563
  • Construction Service vis-à-vis Works Contract: Stay granted as various issues are debtable but there are decisions in favour of the appellants.

  • STO 2010 CESTAT 487
  • Service Tax: Commercial and Industrial Construction Service: Work Contract: Classification of Service: Section 65A being embedded to the statute cannot be read in isolation of Section 65(25b) to serve it's purpose. The principles laid down for classification embraces the activities of the appellant to the appropriate category which the Legislature intended by Section 65(25b) of the Finance Act 1994.

    Service Tax: Work Contract: Activities which were not probably appearing in any of the previous entries or to become more specific in terms of section 65A are embodied under the new entry. Reading of Section 65(105)(zzzza) throws light that the term "works contract" is such an activity relating to sale of goods followed by services to achieve the purpose enumerated by sub-clause (i) of Section 65 (105)(zzzza) of the Act. Those are brought by this specific entry under the caption of works contract service without making other entries otiose or redundant.

    Service Tax: Section 65 (105): New Entry does not repeal previous entry: Entries independent of each other : The new entry does not repeal the previous entry appearing under Section 65(25b) nor also the new entry tries to encroach over the previous entry, so also the new entry does not make the previous entry redundant. At this stage it appears that the entries are independent of each other to serve the object of law within their exclusive scope and ambit without encroaching each other.

    Service Tax: Commercial and Industrial Construction Service: Work Contract  Pre-deposit:  Pre-deposit taking into consideration appellants financial difficulties pleaded and the amount of Rs. 2,00,000/- said to have been deposited (subject to verification by Revenue), and direct further deposit of Rs. 5,00,000/- (Rupees five lakhs only) in installments.

    Service Tax: Commercial and Industrial Construction Service: Work Contract: Pre-deposit in installments: The first installment of Rs. 50,000/- (Rupees fifty thousand only) shall be payable by 30th August 2010 and subsequent installments shall be payable in nine equal monthly installments of Rs. 50,000/- (Rupees fifty thousand only) by 15th of each month.

  • STO 2010 AP 299
  • Service Tax: Works Contract: Composition Scheme: The benefit of the composition scheme under the 2007 Rules is available [subject to the exercise of option and the conditions of eligibility for exercise of such option as spelt out in Rule 3(3)] only in relation to “works contract service”, as defined in Rule 2(c) as meaning service provided in relation to execution of the works contract referred to in sub-clause (zzzza) of Clause 105 of Section 65 of the Act. (para 24)

    Service Tax: Works Contract: Composition Scheme: Board Circular: The impugned circular merely reiterates the eligibility criterion specified in Rule 3(3), as the condition precedent for entitlement to exercise an option for coming within the composition; scheme, while impliedly recognizing that certain taxable services earlier falling within Clauses (zzd), (zzq) and (zzzh) of Sec. 65 (105) may now fall within the recently introduced Clause (zzzza); of Sec. 65(105) (amendment w.e.f. 1-6-2007), in the light of the criteria for classification of taxable services spelt out in Section 65A of the Act. (para 25)

  • STO 2010 CESTAT 292
  • Service Tax: Works Contract: Construction of a canal and pumping station for irrigation: Pre-deposit: Infrastructure activities, which are concerned with welfare activity, for the citizens of this excluded from the liability of service tax. The work executed by the appellant is in respect of the irrigation system for the Government of Andhra Pradesh and is not for any commerce or industry. The clarification referred to by the Tribunal applies equally to the impugned activity undertaken through EPC mode. Waiver of pre-deposit of the dues adjudged against the appellants and stay recovery thereof pending disposal of the appeal. (para 7,7.1)

  • STO 2010 CESTAT 201
  • Service Tax: Works Contract: Service: The term service generally means service of any description which is made available to potential user and includes the provision of facilities. An activity in the nature of service whether provided individually or integrally and' solely, separately or combinedly with other activities has its identity. (para 8)

    Service Tax: Works Contract: Composite or Turnkey contracts: A play and simple service contract or a composite contract comprising various activities of different nature of services do not make any difference to discern role of each service involved in a composite or Turnkey contracts. (para 8)

    Service Tax: Works Contract: Assessable Value: Difficulty may arise only in determination of assessable value of such service involved in such contracts. But Article 366 (29A) (b) read with Article 286A and 246 has obviated such difficulty enabling to determine value of goods segregating the same from different elements of service involved in these contracts. (para 8)

    Service Tax: Works Contract: Segregation of Service Element: Segregation of service element from goods involved in the above nature of contracts is permissible when sale of goods involved in such contract is segregated under the Constitution provisions. (Para 8)

    Service Tax: Works Contract: Interpretation of statute: It is well-known that the one and the only proper test in interpreting a section in a taxing statute would be that the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning fairly and squarely hits. (Para 9)

    Service Tax: Works Contract: Severability of Turnkey contract: Leviability of service tax on different elements of services certainly depends on the facts and circumstances of each case and classification of the respective services. Severability of composite and turnkey contract permitted by Constitution by Article 366 (29-A) (b) cannot be said to have been for the mere purpose of levy of sales tax. Severance discerns service elements of the contracts and provides measure of levy to impose service tax on taxable services. Such proposition finds support from judgment of Apex Court in the case of All India Federation of Tax Practitioners (supra) as well as judgment of BSNL (supra) and Imagic Creative Pvt. Ltd (supra). (Para 10, 10.1)

    Service Tax: Works Contract: Vivisection of Turnkey Contracts: When Article 366(29-A)(b) to the Constitution has made indivisible contracts of the aforesaid nature divisible to find out goods component and value thereof, it can be unambiguously be stated that the remnant part of the contract may be attributable to the scope of service tax under the Provisions of Finance Act, 1994. Turnkey contracts can be vivisected and discernible service elements involved therein can be segregated and classifiable as well as valued for levy of service tax under Finance Act, 1994 provided such services are taxable services as defined by that Act and depending on the facts and circumstance of each case, services by way of advice, consultancy or technical assistance in the case of turnkey contract shall attract service tax liability. (para 11)

  • STO 2010 CESTAT 281
  • Service Tax: Works Contract Service: Pre-deposit: Board Circular No. 116/10/2009-S.T. dt 15.9.2009: Work or services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams not taxable: There is no dispute as to the fact that appellant are providing the services to the Gov of Andhra Pradesh for the irrigation system i.e. construction of canals etc., which is of non-commercial nature. As the issue involved in this case and in the case of Lanco Infrastructure (supra) being identical the appellant has made out a prima-facie case for waiver of pre-deposit of the amount involved. (para 5,6)

  • STO 2010 CESTAT 242
  • Service Tax: Works Contract Vs. Sale: The assessee had paid service tax of an amount of Rs.79,454/- under the category of works contract. Assessee had collected from their customers only the sale value of Anodized Aluminium extrusions. Therefore the taxable value of the service rendered was 'nil' during the material period and assessee were eligible for the refund of service tax they had paid during the material period. Stay Application filed by revenue is rejected.

  • STO 2010 CESTAT 212
  • Works Contract Service: The certificate proves that the appellants are registered with the commercial tax authorities of Chhattisgarh Government as an assessee for 'works contract' from 15.04.2005. Activities classified under 'works contract' were brought under tax net only from 01.06.2007. Even if the impugned activities are held to be correctly classified by the Commissioner, since the said activity was undertaken in relation to construction of Water Reservoir, the same stands excluded from the activities taxable under that entry.

  • STO 2010 CESTAT 35
  • Service Tax: Works contract service: Refund: Subsequent entry enacted means previous entry did not cover the service: Subsequent to introduction of levy of service tax on works contract, such contract would not be covered prior to 1.6.2007 under the taxable head of installation or commissioning service. No direct decision in favour of the Revenue for levy of service tax on the service component of a works contract prior to 01/06/2007. (para 8, 46)

    Service Tax: Works contract Service: Refund: No service tax leviable on value of material sold: It is well settled that service tax cannot be levied on the value of material sold during the course of providing works contract service. (para 9)

    Service Tax: Works Contract Service: Refund: Erection and commission are not consulting engineering services: The charges for erection, installation and commissioning are not covered under the category of consulting engineering services and that commissioning or installation service will be separately taxable under the relevant entry and are not chargeable as consulting engineering services. (para 10)

    View of co-ordinate benches of Tribunal binding: I am of the opinion that the view taken by this Tribunal in Daelim case and followed consistently in subsequent cases has the stamp of approval of the apex Court and hence will have binding effect. For the reasons already recorded, I hold that the view taken in Daelim case and consistently followed by co-ordinate Benches in numerous subsequent cases including Diebold Systems (supra) is still binding on co-ordinate Benches(para 43, 45)

  • STO 2009 CESTAT 1415
  • Service Tax: Service of ‘completion and finishing' of commercial complexes: Exemption under Notification No. 15/04-ST dated 20.02.2004: The assessee made out a strong prima facie case for waiver in the light of the Stay Order No. 319 - 321/2009 dated 29.04.09, in the case of M/s. Buidcraft Interior Pvt. Ltd. and others Vs. CST, Chennai, wherein, waiver was granted accepting the contention of the assessees that (which is similar to the contention raised by the assessees in the present case) they were rendering 'works contract' services on which service tax liability has been discharged and therefore, they could not have been held to be rendering service under different category during the period in dispute. (Para 2).

    Stay granted.

  • STO 2009 CESTAT 1536
  • Service Tax: Providing services of erection, commission and installation of plant, machinery and equipment at different places belonging to different parties: Works contract: Scope and liability: Appellant had undertaken composite contract and may be, one or two contracts will be only for labour work. At the same time, the contentions raised by the appellant that the Department of Commercial Tax, Govt. of Andhra Pradesh has assessed their contracts as 'Works Contract' and liability has been ascertained and the same has been discharged. In an identical issue, in Unitech Power Transmission Ltd. Vs. CCE, Visakhapatnam, this Bench by Stay Order No. 1142/2009 dated 17.8.2009 case, this Bench has granted full waiver of pre-deposit of the amounts involved therein.(Para 7).

    Stay granted.

  • STO 2009 CESTAT 1366
  • Service Tax: Erection, commissioning and installation service under ‘works contract’: Scope and liability: The appellants had undertaken erection, commission and installation activities as part of the work executed under ‘works contract’ for rural electrification and household electrification work for Hubli Electricity Supply Company, augmentation of power supply and ground lighting for Hubli Airport, electrification of the centenary building of University of Dharwad, etc. The appellants had rendered the impugned services and also supplied the requisite material to its clients. They had taken Registration under Karnataka VAT Act, 2003 and also the assessment of the appellants for VAT under ‘works contract’ for various years. The assessment also covered the impugned activity. Since the works contract was brought under tax net for the first time on 1.6.2007 and the material period ends by 31.3.2007, it is argued that the impugned demand and penalties are not sustainable. The appellants have since registered as provider of services under ‘works contract’ with the department. It is submitted that the said activity assessed under the head ‘works contract’ could not have been subjected to tax for an earlier period under any other pre-existing category. It is settled that service tax cannot be charged on an activity brought under tax net under a new entry under a pre-existing category for a previous period without matching changes in the existing entries. (Para 1,3)

    Stay granted.

  • STO 2009 CESTAT 1396
  • Service Tax: Service of commissioning or installation during the period 1.7.03 to 9.9.04 and the activity of erection, commissioning or installation during the period 9.9.04 to 31.3.07: Liability: In terms of the ratio of the Tribunal in the case of Daelim Industries Co., Ltd. Vs CCE Vadodara STO 2003 CESTAT 9 this Tribunal had held that a turnkey contract could not be vivisected and activity carried out in execution of the turnkey contract can not be subjected to tax. The question whether the works contract could be vivisected and subjected to tax is pending before the larger bench of this Tribunal in the case of CCE Vs BSBK Pvt Ltd., STO 2008 CESTAT 547. Commissioner has confirmed the demand of service tax against the appellant finding that the nature of the contract is classifiable under erection, installation and commissioning. Since appellants are assessed to value added tax under the category of works contract and in the light of the decisions of the Tribunal, the appellants have been able to make out a prima facie case against the dues adjudged against them.(Para 3).

    Stay granted.

  • STO 2009 CESTAT 1149
  • Service Tax: Alteration and renovocation activities: Abatement in respect of the materials used in works contracts executed: This bench have been directing the appellants to make pre-deposit in similar such case as that of the present appellant considering the nature of activities carried out by each. In absence of work orders for examination to ascertain the quantum of liability in respect of the services provided by the appellant it is unable to appreciate the case of the appellant for waiver of pre-deposit fully. The activities carried out by the Appellant have been found by the authorities as not calling for enjoying abatement. The authority was of the view that services provided was dominant than materials used in the entire activity and that the appellant is not entitled to the abatement.(Para 5,6).

    Pre-deposit ordered.

  • STO 2009 CESTAT 1244
  • Service Tax: Notification No. 12/03 dated 20.6.03 and deduction of 60% of gross value of contract towards materials involved in the work: Goods involved in execution of works contract shall be subject matter of service tax while composite works contract involve both service and goods. In order to claim the quantum of goods involved in a works contract executed, the appellant is required to come out with clean hands to prove quantum of goods involved. Such a proposition is absent which brings charge against the appellant. The appellant has not produced material before him to arrive at the quantum of goods involved in the works executed by the appellant. When the appellant failed to provide the value of goods used/involved in the works, he was compelled to raise the demand against the appellant. Interest of Revenue weighs heavier in absence of any material suggesting financial hardship of appellant to call for reasonable amount of pre-deposit following the decision of the Apex Court in the cased or Dunlop India Ltd reported in STO 1984 SC 5 and in the case of Beneral Valve reported in STO 2006 SC 1264 (Para 4).

    Partial pre-deposit ordered.

  • STO 2009 CESTAT 1012
  • Service Tax: Waiver of pre-deposit: The applicants are required to pre-deposit penalty of Rs. 5,00,000/-. The applicants are actually undertaking sub-contract work of construction. The appellants stated that actually, their work comes under the category of Works Contract. They have been registered with the State Government authorities and have been paying the VAT also. During the relevant period, there was confusion regarding the liability of the activities of the applicants to Service Tax. Consequently, they could not discharge the Service Tax liability in time. The entire amount of Service Tax has already been paid. Moreover, it is a fact that there was some confusion regarding the interpretation of the provisions of the Finance Act, 1994. In view of this, pre-deposit waived.

    Stay granted.

  • STO 2009 CESTAT 769
  • Service Tax: Waiver of pre-deposit: Prima facie the contract entered into with the customers is a composite contract for Supply, Erection, Installation and commissioning of lifts/elevators in the light of the order in Kone Elelvators India Pvt. Ltd., Vs. CST - 2009- TIOL 279 CESTAT, the same cannot be subjected to vivisection for the purpose of levying service tax on a part of the contract prior to 01.06.2007. The period in dispute is 10.06.2005 to 31.02.2007 and with effect from 01.06.2007 the applicants have registered themselves and discharged service tax liability. Pre-deposit waived.(Para 2).

    Stay allowed.

  • STO 2009 CESTAT 753
  • Service Tax: Waiver of pre-deposit and stay: The applicants had actually discharged the Service Tax liability by way of payment through credit. Therefore, it cannot be said that the applicants had not paid the Service Tax. The learned Departmental Representative stated that in terms of the rules invoked by the Adjudicating Authority, the payment through Cenvat credit in these circumstances is irregular. Hence, it cannot be considered as payment. On examining the legal position, the applicants have prima facie a strong case on merits. Pre-deposit waived(Para 3).

    Stay allowed.

  • STO 2009 CESTAT 227
  • Service Tax: Works contract / Commercial or industrial construction services: Activity of work contract for construction of a reservoir, used for generation of electric power: Scope and liability: The construction of reservoir cannot be called as 'commercial or industrial construction services'. The reservoir is akin to a dam, which is clearly exempted from the scope of the said service. The contract itself state that the said contract is a 'works contract' and 'works contract' became liable for Service Tax only with effect from 1.6.2007. In these circumstances, prima facie they have a very strong case on merits in view of decision of the Chennai Bench in the case of Diebold Systems (P) Ltd. Vs. CST, Chennai STO 2007 CESTAT 1077 which have held that whenever a new service is introduced it cannot be charged to Service Tax under the guise of some other service for earlier period, and also in the case of i.e. (i) Daelim industrial Co. Ltd. Vs. CCE, Vadodara - STO 2003 CESTAT 9 (ii) Speco Electric Power Construction Corpn. Vs. CCE, Raipur - STO 2007 CESTAT 463 (iii) L&T Ltd. Vs. CCE, Vadodara-lI- STO 2007 CESTAT 325.

    Stay granted.

  • STO 2008 CESTAT 547
  • Service Tax: Consulting engineer service from 07.07.1997 to 31.03.2002: Scope and liability: Turnkey contract: There is no dispute that, theoretically, service tax can be levied on service part and, at the same time, sales tax can be levied on the sale part of the contract. Service tax can be levied only if the service is a 'taxable service' within the meaning of Finance Act, 1994. In the case of 'turnkey contract', if they are not split only on the ground that the contract is on turnkey project basis, a question may arise as to whether the entire contract will be sale contract. The answer apparently would be in the negative. Only that part of the contract which falls under clause (b) of Article 366(29-A) - amounting to 'deemed sale' will constitute sale contract on which sales tax can be levied. What will happen to the rest of the contract? Whether it will go out of the net of the service tax? Answer again, will be in the negative. The 'service' will have to qualify as taxable service. The case of the respondent is that the service by way of 'advice, consultancy or technical assistance' is provided by MECON as the consultant and they are merely recipient of the service from them. Whether service by way of "advice, consultancy or technical assistance" in the case of turnkey contract will attract service tax will have to be determined on the facts of the case. But the moot question is whether turnkey contract can be vivisected. The conclusion in Daelim case (supra) on the point, prima facie, being not in accordance with law, hence it would be appropriate to refer this case to the Larger Bench to consider the correctness of the decision.(Para 10,11).

    Matter referred to Larger Bench.

  • STO 2008 AAR 88
  • Construction of Residential Complex : Work Contract When the buyer of the sub-plot enters into a works contract, such a contract is not for the construction of an isolated house, but for one which will make available to the buyer, all the facilities such as a club house etc. provided for by the residential complex. Individual houses built through the works contract, therefore, have to be viewed as parts of a residential complex rather than as stand alone houses. Thus the expression “or a part thereof” occurring in clause (c) of (zzzza) of Section 65(105) squarely applies.

    Section 65A is applicable when a taxable service is prime facie classifiable under two or more sub clauses of clause (105) of Section 65
    The service provided in relation to execution of a works contract is clearly classifiable in sub clause (zzzza) of clause (105) of Section 65 and there is no other sub clause where this service could be classified. Section 65A cannot be pressed into service for determining the further categorization under the said sub-clause (zzzza).

    The value of the service component of a works contract which is chargeable to tax would be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.

    As per the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 instead of paying service at the twelve per cent rate specified in Section 66, Rule 3(1) of the above Composition rules gives the service provider an option to discharge his duty liability by paying four per cent of the gross amount charged for the works contract.

  • STO 2008 CESTAT 11
  • Stay : It is trite law that any cost of materials used by a person in undertaking a taxable service is not chargeable to service tax. Admittedly, the appellants have paid service tax on the charges collected by them from customers for the service of repairs/maintenance of tyres. Stay granted.

  • STO 2007 CESTAT 1383
  • Consultancy Engineer : Work Contract : The appellants were executing works contracts awarded by their clients and they were doing so by making use of their own machinery, materials, human resources and money. The works were executed on the basis of the approved plan and design furnished by the client. Upon completion of the work, the building with its site was handed over to the client against full payment of consideration for the work. In this exercise, the Revenue has not brought out any advice, consultancy or technical assistance in any manner having been rendered by the appellants to their clients in any discipline of engineering. Had the appellants been shown to be professionally qualified engineers and to have rendered such advice, consultancy or technical assistance to their clients to enable them to execute such works, the position would have been different. It is not disputed that the works contract became taxable service for the first time on 1-6-07 only. The conduct of the party cannot make an event a taxable service where it is actually not.  Appeal fully allowed.

  • STO 2007 CESTAT 1077
  • Work Contract : Commissioning of ATM : Incidental activity of installation and commissioning of ATMs is not chargeable to service tax in addition to levy of sales tax on the subject matter of the works contracts. Works contract could not be vivisected for a part of it to be subjected to taxation. Charging provisions are to be found in the statute itself and, where there is none in the statute, they cannot be supplemented by Notifications.

  • STO 2007 CESTAT 1167
  • Stay : The scope of the contract is for residual design, engineering, supply, installation and commissioning. It is work contract and the work contract services are liable for tax from the year 2007. In the present case the period of dispute is 2003 to 2005. Tribunal in the similar situation waived the pre-deposit of amount of service tax in the case of L & T Ltd.  Stay granted.

  • 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 1097
  • Stay: Works Contract on turnkey basis: Various legal issues raised which can be considered only at the time of hearing main petition. Rs.19 lakhs and odd already paid considered as sufficient compliance of section 35F. Stay for balance amounts granted.

  • STO 2007 Mad 1250
  • Demand : Work Contract : Service tax demanded without issuing show cause notice. It was only an advisory and not a demand order. Petition premature and hence not maintainable.

  • STO 2007 CESTAT 1136
  • Turnkey project : There being conflicting decisions of Tribunal on the issue whether work contract on turnkey basis can be levied to service tax, matter referred to Larger Bench.

  • STO 2007 CESTAT 155
  • Service Tax: Works contract: Scope and liability: The factual matrix in the present case being an issue of contract of the same subject, which was the subject- matter of the Tribunal's Order dated 6-6-2007 in the case of same respondent STO 2007 CESTAT 395, holding that the contract cannot be vivisected and taxed in piecemeal following the judgement in the case of Daelim Industrial Company Ltd. v. Commissioner of Central Excise - STO 2003 CESTAT 9 (Tribunal), the Respondent should succeed.(Para 3).

    Revenue appeal rejected.

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