Composite works contract cannot be split for service tax without clear proof of separate consideration.

A composite turnkey or works contract cannot be artificially split for service tax on installation and commissioning components unless there is clear evidence of separate consideration for those taxable services. On the available record, no separate charges were shown for different elements of the contract, so the arrangement was treated as an indivisible works contract. In that situation, taxation on a vivisected basis was not sustainable, and liability could not be fastened on the basis adopted by the Revenue.

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Issues: Whether the composite turnkey / works contract could be split up and subjected to service tax on the installation and commissioning components in the absence of evidence of separate consideration.

Analysis: The available record showed no proof that the assessee received separate charges for the different elements of the contract. The contract was treated as a works contract, and in that situation the composite arrangement could not be artificially divided for taxation on isolated components. In the absence of contrary evidence, the earlier Tribunal view on indivisibility of such contracts applied.

Conclusion: The demand could not be sustained on a vivisected view of the contract, and the assessee was not liable on the basis adopted by the Revenue.

Ratio Decidendi: A composite works contract cannot be split up for service tax on individual components unless there is clear evidence of separate consideration for taxable services.

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