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of <h1>Tribunal reclassifies turnkey project services as works contract, not consulting engineers services for service tax.</h1> <h3>Ishikawajima Harima Heavy Industries Co. Ltd. Versus Commissioner of Central Excise, Mumbai V</h3> The tribunal set aside the lower authority's decision to classify services related to a turnkey project as Consulting Engineers Services for service tax ... Classification of service - Design, engineering, procurement, construction and commissioning of two storage tanks and re-classification of LNG - Revenue contended that services would fall in category of Consulting Engineers Services - Appellant contended that entire service was undertaken prior to 1.06.2007; services do not fall in any other category except works contract - Held That:- In light of the case of Hon'ble Apex Court Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT], contentions of Appellant are correct - Impugned order incorrect and liable to be set aside. Issues:Interpretation of service tax liability for turnkey projects executed before 01.06.2007 under works contract category.Analysis:The appellant filed an appeal against Order-in-Appeal No. 356/27/V/2011/COMMR/KS/ST dated 04.11.2011. The appellant was involved in a turnkey project with Petronet LNG Ltd. for various services related to storage tanks and LNG re-classification. The lower authority considered these services as Consulting Engineers Services, leading to a show-cause notice for service tax demands and penalties. The appellant argued that the project execution was completed before 01.06.2007, falling under works contract services, citing the judgment in the case of Larsen and Toubro. The tribunal examined Section 65(105) of the Finance Act, 1994, which defines taxable services as service contracts simpliciter, excluding composite works contracts. The tribunal highlighted that the value of taxable service is the gross amount charged for the service rendered, emphasizing the taxation of service contracts only. It also noted exclusions for works contracts related to infrastructure projects like roads, bridges, and dams, indicating the legislative intent to exclude such contracts from service tax. Consequently, the tribunal held the impugned order incorrect and set it aside, allowing the appeal with consequential relief, if any.
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