Composite contract tax classification bars levy under Erection, Commissioning or Installation Service where Works Contract Service applies from 01.06.2007

A composite contract involving both supply of goods and services was treated as taxable only under Works Contract Service from 01.06.2007, so service tax could not be sustained under Erection, Commissioning or Installation Service for that contract. On that legal basis, the demand under the wrong taxable category was held unsustainable and the assessee obtained consequential relief.

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Issues: Whether service tax could be sustained on a composite contract involving supply of goods and services under the category of Erection, Commissioning or Installation Service for the relevant period, when the contract was liable to be treated as Works Contract Service from 01.06.2007.

Analysis: The composite contract comprised both goods and services. Following the governing legal position applied in the order, such contracts became chargeable to service tax only under Works Contract Service from 01.06.2007. On that basis, levy under any other category for the composite contract was not tenable. The demand raised under Erection, Commissioning or Installation Service was therefore unsustainable.

Conclusion: The demand of service tax under Erection, Commissioning or Installation Service was not sustainable and the finding is in favour of the assessee.

Final Conclusion: The appeal succeeded and the impugned demand did not survive, with consequential relief as per law.

Ratio Decidendi: A composite contract involving supply of goods and services is not assessable under Erection, Commissioning or Installation Service when, on the applicable legal regime, it is chargeable only as Works Contract Service from 01.06.2007.

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