Composite works contracts cannot be split for service tax where railway construction is excluded and the relevant definition does not apply.

A composite turnkey works contract for a DMRC project was treated as incapable of being split and taxed under different service heads. The text states that construction relating to railways fell outside commercial and industrial construction service for the relevant period, and that the later definition invoked by the Revenue did not apply retrospectively. It also notes the settled principle that a works contract cannot be vivisected for service tax purposes where the statutory scheme and exclusion for railway-related construction indicate otherwise. On that basis, the levy by splitting the contract was held unsustainable and refund relief was granted.

---

---

Issues: Whether a turnkey works contract could be vivisected and taxed under different service categories, and whether the refund claim based on such taxation was sustainable.

Analysis: The contract was found to be a turnkey contract for the DMRC project. The Tribunal held that construction relating to railways was excluded from the scope of commercial and industrial construction service, and that the later definition relied upon by the Revenue had no application to the period in dispute. The Tribunal also relied on the settled principle that a works contract cannot be broken up and taxed under different service heads, and referred to the statutory exemption for railway-related construction as indicating the legislative intent not to tax such works.

Conclusion: The levy by vivisecting the turnkey contract was not sustainable, and the impugned order rejecting the refund claim was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded on the ground that the contract could not be split for service tax purposes, and the assessee was entitled to the consequential relief granted.

Ratio Decidendi: A composite works contract cannot be vivisected for levy of service tax under different heads where the statutory scheme and the relevant exclusion do not permit such splitting.

---