Composite works contracts became taxable only from 01.06.2007; no service tax applied to the earlier period.

A composite works contract involving supply of materials and labour could not be bifurcated to levy service tax before works contract service was statutorily introduced. The HC followed binding precedent that such indivisible contracts became taxable only from 01.06.2007, so no service tax could be charged on the same composite activity for the earlier period. The Tribunal's view was accordingly upheld, confirming that liability arises only from the date the statutory charge comes into force.

---

---

Issues: Whether the respondent's activities were taxable as service tax prior to 01.06.2007 or whether they fell within works contract service chargeable only from that date.

Analysis: The dispute was governed by the settled position that a composite works contract involving supply of material and labour could not be split for levy of service tax prior to the statutory introduction of works contract service. The Court followed the binding precedent that such activity became chargeable to service tax only from 01.06.2007 and that no service tax could be levied for the earlier period on the same composite activity.

Conclusion: The respondent was not liable to service tax for the period prior to 01.06.2007, and the Tribunal's view was upheld.

Ratio Decidendi: A composite and indivisible works contract cannot be subjected to service tax for the period before works contract service became taxable, and liability arises only from the date of statutory charge.

---