Composite works contract taxable only from introduction of the works contract service, not under earlier service categories.

A composite contract involving both supply of materials and services was treated as a works contract, so it was not taxable under earlier service categories such as maintenance and repair or construction of residential complex for the period before 01/06/2007. The works contract regime applied only from 01/06/2007, because an indivisible contract became liable to service tax only when that specific service category was introduced. On that classification, the pre-01/06/2007 demand was unsustainable, and the assessee was outside service tax liability for the earlier period.

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Issues: Whether a composite contract involving supply of materials and service was liable to service tax as maintenance and repair service or construction of residential complex service before 01/06/2007, and as works contract service only after 01/06/2007 with the benefit of abatement under Notification No. 01/2006-ST dated 01/03/2006.

Analysis: The contract was found to be composite in nature, involving both supply of materials and service. On that basis, the taxable category of works contract was held to apply only after the introduction of works contract service with effect from 01/06/2007. The reasoning was supported by the principle that indivisible works contracts became liable to service tax only from the date that service category was introduced.

Conclusion: The demand for the prior period was not sustainable, and the Revenue's appeal failed.

Final Conclusion: The order affirmed that composite and indivisible works contracts were taxable only from 01/06/2007 under the works contract regime, leaving the assessee outside service tax liability for the earlier period on the classification adopted by the Revenue.

Ratio Decidendi: An indivisible or composite works contract is liable to service tax only from the date on which works contract service was introduced, and not under earlier service categories for the same composite activity.

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