Composite works contract cannot be split for service tax on selected components before 01.06.2007.

A composite turnkey contract for design, supply, testing, erection and commissioning could not be artificially split into separate taxable elements for service tax purposes. The Tribunal followed the settled position that, for the period prior to 01.06.2007, execution of a works contract could not be taxed under the other service categories invoked in the notice. The demand was therefore unsustainable, and the impugned order was set aside.

---

---

Issues: Whether the composite turnkey contract for design, supply, testing, erection and commissioning of the auto LPG dispensing system could be artificially split for levy of service tax on only part of the consideration, and whether the demand was sustainable for the period prior to 01.06.2007.

Analysis: The contract was a single composite turnkey arrangement covering the entire work, and the dispute involved an attempt to vivisect it into separate components. The Tribunal noted that the same issue had already been decided in the appellant's favour for an identical contract, following the settled position that prior to 01.06.2007, execution of a works contract could not be taxed under the other services invoked in the notice.

Conclusion: The composite contract was not open to artificial splitting for service tax purposes for the relevant period, and the demand could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed in favour of the assessee.

Ratio Decidendi: A pre-01.06.2007 composite works contract cannot be artificially divided to levy service tax on selected components under other categories of taxable service.

---