TaxTMI 
TaxTMI 
2010 (3) TMI 252
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....ring the services under "Maintenance & Repair" service. 3. The facts of the case are that NSCL is engaged in fabrication of structures at site for their various clients such as M/s Reliance Industries Ltd., M/s Essar Steel Ltd., M/s Essar Construction Ltd., M/s L&T etc. Investigation was started and during investigation, statements of officials and directors of the appellant company were recorded. 4. The statement of Shri Kattuputtur Balasubramanian Viswanathan, Director of NSCL was recorded wherein he stated that they were engaged in specialized fabrication and erection of structures, pipings, equipments etc. used in setting up industrial projects at the client's sites like M/s Reliance Industries Ltd., M/s Essar Steel Ltd., M/s Tata Honeywell Ltd., M/s L&T, M/s Bharat Petroleum Corporation Ltd., etc. that they were undertaking the job of fabrication and erection works and repairs and maintenance works relating to the industrial plants/projects/machinery, and they were registered with the Department for providing the services under the category of "Maintenance or Repair Services" since 22.07.2003. Statements of some officials were also recorded. 5. It was further found that....
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....coil for rectification etc. are in the nature of maintenance or repair of machines or equipments. Work of Maintenance or Repair is at predetermined rates but takes place after such installation or commissioning of machines, equipments, structures etc. Learned SDR submitted that the contract is divisible. Appellants undertake repairs and both the parties are bound to each other at a predetermined price as regards maintenance/repair. Therefore, service of maintenance/repair is separately leviable to service tax. 9.2 In the other hand, Shri V. Sridharan, Advocate, learned counsel for NSCL submits that there is no separate contract between the parties for the services of maintenance or repairs at the relevant time. Hence, they are not liable to pay the service tax. 9.3 After hearing both the parties, before taking any decision, it is appropriate to examine the applicability of provisions of service tax law with this regard. The period involved in this case is 01.07.03 to 31.07.05. As per Section 65 (64) of Finance Act, 2003, the definition of Maintenance or Repairs is as under: (64) 'maintenance or repair' means any service provided by - (i) any person under a maintenance c....
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....TR 291 (Tribunal). Relevant portion is extracted below. "We have gone through the records of the case carefully. The appellants carry out repair/maintenance of ships. However, it is not disputed that they do not have any maintenance contract with their customers. In these circumstances, the Government's circular referred to supra by the learned advocate is clearly applicable. In other words, in the absence of a maintenance contract prior to 16.6.2005, the appellants are not liable to pay service tax. The Director General of Service Tax has given some clarification, the Adjudicating Authority has relied on the same without putting the appellants to notice. This is bad in law. Moreover, the clarification of the Director General is contrary to the instructions of the government. The entire period of dispute is prior to 16.6.2005. After the amendment on 16.6.2005, the appellants are paying service tax. It has been clarified by the Government that even if maintenance is carried out under any contract apart from other services, the appellant is not liable to pay service tax prior to 16.6.2005. In order to levy service tax prior to 16.6.2005, a pure maintenance contract is a must. In....
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....tended repair/maintenance is a separate part and has to be treated as such. The Commissioner has rightly held that in the absence of any maintenance & repair contract, the demand based on rate or value contract work is not sustainable. 9.10 We do not find any infirmity in the impugned order in dropping the demand by the Commissioner for maintenance & repair services. Accordingly, we do not find any merit in the appeal filed by the Revenue and the same is rejected. 10. Now, we take up the issue No. (ii). 10.1 Shri V. Sridharan, learned counsel for the appellant (NSCL) submitted that the activity of fabrication of structures at site undertaken by them is not covered under the erection, commissioning and installation service on the following grounds: a) the fabrication of structures at site of the customers amounts to manufacture under Section 2(f) of the Central Excise Act, 1944. Therefore, no service tax can be demanded on the said activity. b) Structures cannot be considered as plant/equipments or machinery. c) No service tax can be demanded on lumpsum composite contract. d) Expression "in relation to" cannot be read out of context. Therefore, activities like sand blasting, ....
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....said activity. 14. As per Finance Act, 2003, Section 65 (28), the commissioning or installation service was defined as under: "(28) "commissioning or installation" means any service provided by a commissioning and installation agency in relation to commissioning or installation of plant, machinery or equipment; 15. In 2004, due to amendment in the Finance Act, 2004, erection was also added and the service of "Erection, commissioning or installation" was brought under Section 65(39a) as under. "(39a) "erection, commissioning or installation" means any service provided by a commissioning and installation agency in relation to erection, commissioning or installation of plant, machinery or equipment;" 16. In 2005, there was a further amendment in the Finance Act and the definition reads as under: "(39a) "erection, commissioning or installation" means any service provided by a commissioning and installation agency, in relation to- (i) erection, commissioning or installation of plant, machinery or equipment; or" 17. Further amendment took place in 2006, wherein the "Erection, commissioning and installation" service meant as under, which came into existence with effect from 1.5.06....
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....ice. 21. Circular No.334/4/2006-TRU, dt.28.02.06 further clarified the scope of the existing services is being extended or clarified and the extract of the same are reproduced as under: " (9) Erection, commissioning or installation service, to include erection, commissioning or installation of structures, whether or not pre-fabricated; "5.4 "Erection, commissioning or installation service" is amended to cover erection, commissioning or installation of pre-fabricated structures. 22. From the above extracts of Board circular, it is clear that - a) The structures were not intended to be covered under Plant, Machinery or Equipments. b) Erection refers to civil work to installation/commissioning of a plant & machinery. c) Erection, commissioning or installation of structures whether fabricated or not was not covered by the definition of Erection, Commissioning or Installation service prior to 01.05.2006. The erection, commissioning or installation of pre-fabricated structures was brought into service tax net with effect from 1.5.06. 23. From the above discussion, we find that the activity undertaken by the appellant is fabrication of structures and this was not covered under er....