Service tax classification of pre-2007 turnkey contracts remanded for fresh adjudication after reconsideration of works contract treatment.

Service tax classification for pre-01.06.2007 turnkey contracts was examined by reference to whether the activity fell within erection, commission and installation services or works contract treatment. The dispute was linked to the later clarification in G.D. Builders, and the adjudication was found to require reconsideration on a proper hearing. The impugned order was set aside and the matter remanded for fresh adjudication, with the merits expressly left open and natural justice to be followed.

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Issues: Whether the service tax liability on pre-01.06.2007 services was to be examined as erection, commission and installation services or as works contract, and whether the matter required remand for fresh consideration.

Analysis: The dispute was treated as turning on classification of the contract, with reference to the claim that the contract was a turnkey contract and to the later clarification in the Delhi High Court decision in G.D. Builders. The impugned order was set aside so that the adjudicating authority could reconsider the issue afresh after granting due hearing and applying the principles of natural justice.

Outcome: The matter was remanded to the adjudicating authority for fresh adjudication, with the merits left open.

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