Applicability of Service tax

[MANASH MUKHERJEE]

Dear Sir,

One assessee is doing fabrication work and accordingly paying central excise duty.The same asseessee while doing fabrication work in a cement factory , the department of CBEC issued SCN. The ground of SCN was that the assessee is providing service to the cement factory under the category of ' erections , commissioning and installation service' and shold pay service tax. Please guide which view is correct ?

[MUKUND THAKKAR]

Sir,

if fabricator doing work in factory under works order taking delivery of raw material as site (cement factory) than service tax is applicable under category of erection,,commissioning and installation service.

if fabricated items delivery from factory in such case excise is applicable. erection and commissioning in scope of supplier than service tax is also applicable in such services.

AI Summary

Service tax on erection and commissioning: applies when fabrication and installation are performed at the client's site. On-site fabrication carried out at the buyer's premises with raw materials delivered to site constitutes erection, commissioning and installation service and is taxable as service tax; finished fabricated goods delivered from the fabricator's factory are treated as manufacture and removal and attract central excise. Erection and commissioning elements performed by the supplier at site remain subject to service tax.