Erection, commissioning and installation service applied to fabricated non-marketable goods; subcontractor remained independently liable for tax.

Jurisdiction was upheld where the service provider had no central or regional registration, its head office was at Raipur, and the taxable activity was carried on through that office, making Raipur a sufficient jurisdictional nexus. Fabrication of a specially designed, non-marketable stool from materials supplied by the principal was treated as erection, commissioning and installation service rather than manufacture. Payment of service tax by the principal contractor did not discharge the subcontractor's independent liability for its own taxable services. Non-registration, non-disclosure of work orders and related records, and other suppressed facts justified invocation of the extended limitation period; the service tax demand, penalties and adjudication order were sustained.

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Issues: (i) whether the Commissioner, Raipur had jurisdiction to issue the show cause notice where the appellant was not centrally or regionally registered and had its head office at Raipur though the work was executed outside Raipur; (ii) whether the activity of fabricating the stool amounted to manufacture or was covered by erection, commissioning and installation service; (iii) whether discharge of service tax by the principal contractor absolved the appellant subcontractor of its liability; and (iv) whether the extended period of limitation was invocable on the facts.

Issue (i): whether the Commissioner, Raipur had jurisdiction to issue the show cause notice where the appellant was not centrally or regionally registered and had its head office at Raipur though the work was executed outside Raipur;

Analysis: The appellant was admittedly not registered under the service tax regime either centrally or at the work sites. The head office was situated at Raipur and the work orders were executed through that office. In the absence of registration, the place of the head office and the place from which the taxable service provider operated were treated as sufficient connecting factors for jurisdiction. The authorities cited by the appellant were held inapplicable on the peculiar facts.

Conclusion: The Commissioner, Raipur had jurisdiction. The finding is against the assessee.

Issue (ii): whether the activity of fabricating the stool amounted to manufacture or was covered by erection, commissioning and installation service;

Analysis: Manufacture requires emergence of a new article which is goods and marketable. The stool in question was fabricated from materials supplied by the principal, was of special specifications, and was meant to be fixed to an embedded structure. It was not shown to be marketable as a distinct commodity in ordinary trade. The activity therefore fell within the statutory definition of erection, commissioning and installation service and not within manufacture.

Conclusion: The activity was taxable as erection, commissioning and installation service and not manufacture. The finding is against the assessee.

Issue (iii): whether discharge of service tax by the principal contractor absolved the appellant subcontractor of its liability;

Analysis: Service tax is payable by the service provider on the taxable service rendered by it. The principal's payment on the gross project value did not establish payment on behalf of the appellant for the distinct subcontracted services. The record also showed inconsistency in the appellant's position and no satisfactory explanation for non-registration or non-payment by the appellant despite similar services being rendered through a related firm that was registered.

Conclusion: Payment by the principal contractor did not absolve the appellant of its independent service tax liability. The finding is against the assessee.

Issue (iv): whether the extended period of limitation was invocable on the facts.

Analysis: The appellant's non-registration, non-disclosure of relevant facts, failure to furnish work orders and other transactional documents, and the existence of another similarly placed registered concern supported the inference of suppression of material facts with intent to evade tax. These facts justified invocation of the extended limitation period.

Conclusion: The extended period of limitation was validly invoked. The finding is against the assessee.

Final Conclusion: The demand of service tax, related penalties and the adjudication order were sustained, and the appeals were rejected.

Ratio Decidendi: A non-registered service provider cannot avoid service tax on the plea that the principal contractor has discharged tax on the overall project, and fabrication of a specially designed non-marketable article supplied from principal's materials for installation at a site falls within erection, commissioning and installation service rather than manufacture; suppression of such material facts justifies extended limitation.

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