Works contract classification applied to exhibition stall installation involving material transfer, validating concessional composition tax treatment over interior decorator service.

Conceptualising, designing and installing exhibition stalls under customer work orders was treated as works contract service where the customer supplied or approved stall layouts and the provider gave no independent advice, consultancy or beautification services. Installation using purchased materials, transfer of property in those goods to customers, and VAT payment on the goods component established a composite contract comprising goods and service elements. The Works Contract Composition Scheme was therefore applicable, permitting service tax at concessional composition rates and rendering the disputed demand unsustainable.

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Issues: Whether the activity of conceptualising, designing and installing exhibition stalls using materials supplied under customer work orders was classifiable as works contract service or interior decorator service.

Analysis: Interior decorator service requires advice, consultancy or technical assistance relating to planning, design or beautification of spaces. The stall layouts and designs were supplied or approved by customers, and the activity did not involve independent advice, consultancy or beautification by the service provider.

Analysis: The contracts involved installation of exhibition stalls using purchased materials, transfer of property in those goods to customers, and payment of VAT on the goods component. These undisputed facts established a composite works contract containing both goods and service elements. The composition option under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was therefore validly applied.

Conclusion: The activity was works contract service and not interior decorator service; payment of service tax at the applicable concessional composition rates was lawful, and the disputed service-tax demand was unsustainable.

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