2020 (2) TMI 389 - AT - Service Tax

Tribunal Grants Appeals: Service Tax Abatement Allowed for Separate Equipment Supply Agreements, Emphasizes Judicial Precedents.

M/s Bahart Heavy Electrical Ltd. Versus Commissioner, C GST & Central Excise, Noida

The Tribunal set aside the impugned orders and allowed both appeals concerning service tax demand and abatement eligibility. It concluded that the ... Levy of service tax - Valuation - inclusion of cost of FOC material - Benefit of abatement - Works contracts services through competitive bidding - appellant provided various services to customers like NTPC, NHPC, Nuclear Power Corporation, Power Grid Corporation and some other customers and electricity boards - period covering April 2013 to March 2015 and April 2015 to June 2017 - HELD THAT:- Reliance placed in the case of M/S BHARAT HEAVY ELECTRICALS LTD. VERSUS COMMISSIONER, CENTRAL EXCISE, NOIDA-II [2018 (12) TMI 378 - CESTAT ALLAHABAD] where it was held that Prior the appellant started Civil Construction, Errection or Installation at the agreed site, the equipments to be erected/installed at that site were agreed to be supplied to the appellant vide a separate agreement. This particular fact makes it abundantly clear that property in goods which were to be erected and installed by the appellant had not transferred in his favour at the site of construction and erection. Appeal allowed. Issues:Identification of identical issue in two appeals regarding service tax demand and abatement eligibility.Analysis:The case involved two appeals with identical issues related to service tax demand and abatement eligibility. The appellant held centralized Service Tax Registration for various services and received show cause notices for service tax demands amounting to around Rs. 95 crores and Rs. 35 crores for different periods. The Revenue contended that all services provided by the appellant were part of the same service, thus abatement was not admissible. Both parties agreed that the issue was covered by a previous Tribunal decision in the appellant's favor. The Final Order No.72715/2018 dated 01 November, 2018, set aside the impugned order and allowed the appeal based on the indivisibility of works contracts and the separate nature of the services provided by the appellant.The Tribunal noted that the contracts for Civil Construction, Erection or Installation services involved separate agreements for the supply of equipment, indicating the non-transfer of property in goods to the appellant at the site of construction. This fact differentiated the services and contracts, leading to the conclusion that the value of the contracts could not be treated as part of the gross-value for the entire work done by the appellant. The Tribunal referred to legal precedents to support this interpretation and set aside the order concerning these contracts. The Tribunal also analyzed the Commissioning and Industrial Construction Services contract separately, emphasizing that the technical specifications and materials were provided by the service recipient, making it distinct from the other contracts. The appellant was entitled to abatement under Rule 2 (A) (ii) of the Service Tax (Value of determination) Rules, 2006, for this contract.Regarding the Erection, Commissioning & Installation Services contract, the Tribunal reiterated that the goods required for this service were supplied to the appellant through a separate agreement, negating the applicability of works contract liability on the gross-value. The Tribunal emphasized the importance of maintaining judicial discipline and adherence to previous decisions, warning the Adjudicating Authority to strictly follow judicial decisions. Ultimately, the Tribunal set aside the impugned order and allowed both appeals, disposing of the miscellaneous application as well.This detailed analysis of the judgment showcases the Tribunal's thorough consideration of the issues at hand, application of legal principles, and reliance on precedents to arrive at a just decision in favor of the appellant.