Discrepancies in Service Tax Calculation on Composite Contracts: Tribunal Waives Dues

The Tribunal found discrepancies in the calculation of short-payment and taxable value in the original order regarding service tax liability on composite contracts for erecting sub-stations. The appellant argued that the demand for differential service tax should not be payable if the two services cannot be separated. Given the pending issue of vivisecting composite contracts for service tax purposes before a Larger Bench, the Tribunal waived the dues as per the impugned order and stayed the recovery until the appeals' disposal.

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Issues:
Interpretation of service tax liability on composite contracts involving multiple services.

Analysis:
The case involved a dispute regarding the service tax liability on composite contracts for erecting sub-stations. The contracts included three components: supply of goods, civil work, and installation of equipment. The appellant had paid service tax on the installation and commissioning services and on the civil construction portion after availing abatement. However, the Department argued that the entire activities should be treated as falling under erection and commissioning services, denying the abatement for civil construction services.

The Tribunal noted discrepancies in the calculation of short-payment and taxable value in the original order. The appellant contended that an additional amount of service tax they had paid was not considered, leading to an excess demand of Rs. 48 lakhs. The appellant also challenged the demand of the differential service tax on its merits, arguing that if the two services cannot be separated, then the entire demand, including the amount already paid, should not be payable.

Both parties agreed that the issue of vivisecting a composite contract for service tax purposes was pending before a Larger Bench in another case. In light of this, the Tribunal held that the appellant had made a case for waiver of dues as per the impugned order. Consequently, the Tribunal waived the dues as per the impugned order and stayed the recovery thereof until the disposal of the appeals.

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