Contract classification drives service tax liability as DMRC matter is remanded for fresh examination of work scope.

Service tax liability on DMRC contracts could not be finally determined because the relevant contracts were not on record. The Bench noted that the true character of the activity had to be tested against the actual contract terms to decide whether it fell under erection, commissioning or installation service, or as works contract service. Without those documents, no conclusive finding on taxability under the Finance Act, 1994 could be made on merits. The DMRC-related matter was remanded for de novo adjudication after examination of the contracts and grant of an effective hearing; the demand relating to Delhi Jal Board remained undisturbed.

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Issues: Whether the demand of Service Tax relating to the DMRC contracts could be finally decided on the existing record, and whether the matter required remand for scrutiny of the underlying contracts to determine the correct taxability under Section 65(39a) of the Finance Act, 1994.

Analysis: The dispute turned on the nature of the work executed for DMRC and whether it was liable to be classified as erection, commissioning or installation service, or otherwise as works contract service. The existing record did not include the relevant contracts executed with DMRC, and the Bench had earlier directed production of those documents to determine the true character of the activity. In the absence of those contracts, a definitive finding on tax liability could not be recorded on merits. The demand already dropped in respect of Delhi Jal Board was not under challenge.

Conclusion: The matter relating to the DMRC contracts was remanded to the Adjudicating Authority for de novo adjudication after examining the relevant contracts and granting effective hearing to the assessee. The Service Tax demand relating to Delhi Jal Board remained undisturbed.

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