Tribunal rules no service tax on turnkey projects pre-amendments

The Tribunal ruled in favor of the Appellants, stating that no service tax could be levied on turnkey projects for the period before specific legislative amendments were made. The Tribunal found that the services provided by the Appellants were related to erection, installation, and commissioning of the project, and no service was supplied to the client during the relevant period. The Tribunal set aside the impugned order and allowed the appeal in favor of the Appellants, granting them consequential benefits.

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Issues:
Whether service tax is leviable on turnkey projects for the period before specific amendments were made in the lawRs.
Whether the appellants provided consulting engineers services to their clientsRs.

Analysis:
The Appellants were involved in a turnkey contract to set up a Captive Power Plant for a specific client. The Appellants argued that they were engaged in the services of erection, installation, and commissioning of the project, and the drawings and designs obtained were for their internal use. They contended that no service was supplied to their client during the period in question. The Appellants cited various Tribunal decisions to support their claim that no service tax was applicable to turnkey projects and related services before specific amendments were made in the law. The Tribunal agreed with the Appellants, stating that based on the cited decisions, no service tax could be levied on the Appellants for the turnkey project executed during the impugned period. The Tribunal set aside the impugned order and allowed the appeal in favor of the Appellants.

The ld. SDR supported the impugned order, arguing that the Appellants provided consulting engineers services to their clients, justifying the demand for service tax. However, the Tribunal, after considering the arguments and the cited decisions, concluded that the Appellants' case aligned with the previous decisions where no service tax was applicable to turnkey projects before specific legislative amendments. Therefore, the Tribunal ruled in favor of the Appellants, setting aside the impugned order and granting consequential benefits to them.

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