Composite works contract valuation cannot ignore goods component; service tax demand on full contract value was unsustainable.

A composite turnkey works contract for erection, commissioning and installation could not be vivisected to levy service tax on the entire gross contract value. The Tribunal held that where the assessee had already discharged tax on the service component, the Revenue could not ignore the goods element and treat the whole receipt as taxable service value. Following the assessee's own earlier ruling and coordinate bench decisions, it held that exclusion of the goods component was required in valuation of such contracts. The impugned demand on the full gross receipt was therefore unsustainable, and the assessee obtained consequential relief.

---

---

Issues: Whether service tax could be demanded on the entire gross contract value for erection, commissioning and installation work treated as a works contract, and whether the assessee was entitled to relief against the differential demand.

Analysis: The contract was found to be a works contract on turnkey basis, and the Revenue had adopted the entire contract value for computing service tax despite the assessee having already discharged tax on the service component. The Tribunal held that the contract could not be vivisected for taxing the whole receipt as service value. It also followed the earlier decision in the assessee's own case and the coordinate bench rulings relied upon, which supported exclusion of the goods component from service tax valuation in such contracts.

Conclusion: The demand on the entire gross receipt was held unsustainable, and the assessee succeeded.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the transaction is a composite works contract, the entire contract value cannot be subjected to service tax by ignoring the goods component and splitting the contract for valuation purposes.

---