TaxTMI 
TaxTMI 
2010 (12) TMI 147
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.... commissioning of Electrical, Hydraulic & Fire systems for under ground Mandi House Station and associated Tunnel in section S-4 of East-West Corridor of DMR Project. Contract 3E 42 is for supply, fabrication, installation, testing and commissioning of Electrical, Fire Detection & Suppression Systems of Line 3 of DMR Project. Contract 3E 43 is for supply, fabrication, installation, testing and commissioning of Electrical, Fire Detection and Suppression Systems for Ganeshnagar, Janakpuri, Uttamnagar etc. of Line 3 of DMR Project while Contract 3E 46 is for supply, fabrication, installation, testing and commissioning of Electrical, Fire Detection & Suppression Systems for elevated stations Pragathi Maidan and Indraprastha stations of DMR Project. Under the afore said contracts M/s. ABB Ltd., have supplied as well as carried out installation and commissioning of various electrical equipments, fire detection and suppression systems. The scope of the work undertaken include supply and laying of GI conduits with accessories for PA system, communication and signaling system, supply and laying of medium voltage, aluminium conduits/under ground insulated and armoured cables, external ....
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....the taxable services provided to M/s. DMRC supply of equipments designs, manufacture, supply installation, testing and commissioning of electrical hydraulic and fire systems for underground Barah Khamba Station and accordingly confirm the demand of service tax of Rs. 1,45,92,994/-(Rupees One Crore Forty Five Lakhs Ninety Two Thousand Nine hundred Ninety four only) and Education Cess of Rs.2,91,860/- (Rupees Two Lakh Ninety One Thousand Eight hundred and Sixty only) under the provisions of proviso to Section 73(1) of the Finance Act, 1994. ii) I hold that M/s. ABB are also liable to pay interest at the applicable rate as per the provisions of Section 75 of the Finance Act, 1994, in addition to the service tax payable by them. iii) I order appropriation of Rs. 56,13,702.00 (Rupees Fifty Six lakhs Thirteen thousand Seven hundred and Two only) deposited towards service tax inclusive of Education Cess against the service tax liability confirmed at (i) above. I order that the balance amount of service tax and interest thereon be paid forthwith by M/s. ABB. iv) I impose penalty of Rs.1,48,84,854/- (Rupees One Crore Forty Eight lakhs Eighty Four thousand Eight hundred and Fifty Fo....
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....rovisions of Delhi Value Added Tax Act, 2004, which is annexed at page 2156 to 2166 of the paper book. It is his submission that all the contracts are identical but for different areas; they are indivisible contracts; no separate value is available for material or labour in any of the contracts; the parties involved in the transactions i.e. the appellants and DMRC have treated the contracts as works contract only; TDS has been deducted as per the provisions applicable to works contract and the entire information was provided to the authorities during the course of investigation and adjudication. It is his submission that the Adjudicating Authority has not accepted these as composite contracts and turnkey projects without any reason. He would submit that all the documents and submissions made before the authorities would indicate that these entire contracts are turnkey contracts and composite turnkey contracts. It is also his submission that the show-cause notice also considers these contracts as turnkey contracts and it is not open to the Revenue to argue to the contrary. It is also submitted that the facts that equipments supplied by the appellants ha....
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.... CCE, Bangalore v. Murali Sesh Enviro Engineers, Bangalore 2008- TIOL-714-CEST AT-BANG f. Blue Star Ltd. v. CCE, Hyderabad-II 2008-TIOL-342- CESTAT-BANG. 4.2. It is also his submission that whether an activity involving of execution of works contract is classifiable under works contract cannot be taxed prior to 01/06/2007 has been decided by the Honrable High Court of Karnataka in the case of Turbotech Precision Engineering Pvt. Ltd. [2010(18) STR 545 (Kar.)]. He would draw our attention to the specific paragraphs. It is his further submission that in an identical issue, the Tribunal in the appellants own case, whether a contract which is considered by both the parties as works contract and which is recognized by the State Government as works contract; can be taxed prior to 01/06/2007, has been decided in their favour vide Final Order No.1016/2010 dt. 19/7/2010. He would draw our attention to the relevant portions of our final order and submit that the factual position in the current case is identical to the case which was decided by this Bench. It is the submission that show-cause notice invoked extended period of limitation which is incorrect ....
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....works contract cannot be vivisected and the part of supplied material is not subjected to service tax and he submitted that the services are subject to service tax is incorrect law as the said decision was revisited by the Larger Bench in the case of CCE, Raipur Vs. BSBK Pvt. Ltd. [2010(253) ELT 522 (Tri. LB)], wherein the Larger Bench has answered the reference for the term that turnkey contracts can be vivisected and discernible service elements involved therein can be segregated and classifiable as well as valued for levy of service tax under the Finance Act, 1994 provided such services are taxable services as defined by the Act and depending on the facts and circumstances of each case, services by way of advice, consultancy or technical assistance in a case of turnkey contracts. Leviability of the service tax on different elements of services certainly depends on the facts and circumstances of each case and classification of the respective services. It is his submission that on reading the decision of the Larger Bench, it is clear that even prior to 01/06/2007, elements of services in a composite service contract can be vivisected and subjected to service tax. ....
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....lidated charges, service tax would be leviable on such consolidated amount. He would also rely upon the circular No.62/11/2003 dt. 21/8/2003 for this proposition and also on the circular No.80/10/2004-ST dt. 17/9/2004 to emphasize that even if there is a composite contract for erection, commissioning and installation, erection charges should be taxed as part of the category service rendered under erection, commissioning and installation services. It is his submission that the decision of the Tribunal having relied upon the circular dt. 22/5/2007, this Bench should give equal weights to other 3 circulars dt. 20/6/2003, 21/8/2003 and 17/9/2004 to come to a conclusion and the decision of the ABB Ltd.s own case should not be applied without giving due consideration to the submissions made now and the decision of the Larger Bench decision in the case of BSBK(supra). It is the submission that the reliance placed upon by the ld. Counsel in the case of Turbotech Precision Engg. Pvt. Ltd. (supra) as upheld by the Honrable High Court of Karnataka is in respect of the service rendered like design development, design review, manufacture, assembly of bought-out and manuf....
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....e Act, 1994 under the heading erection, installation and commissioning agency. It is undisputed that the appellants had Service Tax registration for erection, commissioning and installation services and have been paying service tax on the activities of tower engineering consultancy or erection, installation and commissioning jobs. The Adjudicating Authority has proceeded on the premise that the appellants are providing the services of erection, installation and commissioning of the contracts along with supply of material and the agreement can be vivisected. He proceeded on the ground that the consideration and value for taxing of the services and the supply of materials being two separate incidences, Revenue is well within its rights to vivisect the contract entered by the appellants, as it is undisputed that there is purchase of the equipments, materials and an element of erection and commissioning. He proceeded on the ground that the vivisection of contract was correct and that part which is liable for service tax is the services rendered and the bills raised by them being a consolidated bill and not being separately indicative of the materials supplied an....
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.... the bills raised by the appellants as per the provisions of the law, on execution of said projects. It is seen from the records that the appellants are not raising a lumpsum bill for the completion of the project, but are raising Running Account Bills, for the work completed and it included the element of supply of the materials which was either manufactured by the appellants or procured from outside. The discharge of VAT and deduction of TDS by the DMRC by taking the amount from the Running Account Bills of the appellants would definitely indicate that the said contracts have been considered by both the parties as works contracts. It is also seen from the records produced before us that the deduction of VAT is termed as WCT 2% i.e. Works Contract Tax 2% which would indicate that the appellants as well as DMRC has acted on the contract as that being a Works contract. If that be so, the contention of the assessee that the leviability of service tax under the works contract would be effective only from 01/06/2007 is correct. We find that in our own Final Order No.1016/2010 dt. 22/7/2010, in the assessees own case as regards contracts for supply, erectio....
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.... under Section 65 (105) (zzzza) of the Finance Act 1994. If that be so, the service tax liability if any will be on the appellants from 1.6.2007. It is also be to noticed that the CBEC vide Circular No B1/16/2007-TRU dated 22.5.2007 has in paragraph 9.9 and 9.10 has clarified as under:- Presently, erection, commissioning or installation service [Section 65(105)(zzd)], commercial or industrial construction service [section 65(105)(zzq)] and construction of complex service [section 65(105)(zzzh)] are separate taxable services. 9.9 Various trade and industry associations have raised apprehension in respect of classification of a contract either under the newly introduced works contract service or under erection, commissioning or installation and commercial or residential construction services. 9.10 Contracts which are treated as works contract for the purpose of levy of VAT/sales tax shall also be treated as works contract for the purpose of levy of service tax. This is clear from the definition under section 65(105)(zzzza). 18. We find that on this basic issue whether the contract in question would be a works contract or any ....
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....ifferent provisions of the Act. The respondent contended that they are not liable to pay the service tax as Section 65(13) of the Act is not applicable to the respondent-assessee. However, the contention of the assessee was rejected by the Deputy Commissioner of Central Excise (Service Tax Division), Bangalore. Being aggrieved by the same, the assessee filed an appeal before the Commissioner of Central Excise (Appeals), Bangalore, which appeal also came to be rejected. Aggrieved by the concurrent findings, a second appeal was preferred before the CESTAT. CESTAT considering the different provisions of law of the Finance Act came to be conclusion that the assessee is not liable to pay either service tax or the interest or the penalty levied by the revenue. Accordingly, the appeal of the assessee came to be allowed by the Tribunal. 3. Being aggrieved by the same, the present appeal is filed raising the aforesaid substantial questions of law. 4. We have heard the learned counsel for the parties. 5. The main crux of the matter in this case is whether on the date of relevant assessment period the service rendered by the assessee has to be classified under the de....
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....the assessee cannot be considered as a consulting engineer, the question of calling upon the assessee to pay the service tax under the Finance Act, brought the assessee under the word consulting engineer does not arise at all. Therefore, the said point has to be answered against the revenue and in favour of the assessee. 9. So far as the execution of the works contract is concerned, the works contract is defined under section 65(105)(zzzza) which reads as under: (zzzza) to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation.- For the purposes of this sub-clause, works contract means a contract wherein, - (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out,- (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of electrical and electronic devices, plumbing,drain laying or other installations f....
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....find that the issue before us involved in the current case is regarding the contract of supply, erection, installation and commissioning of fire, hydraulic systems and the issue before us in the case of the appellants own case in Final Order dt. 22/7/2010 was for supply, erection, installation and commissioning of power systems and distribution systems. Though the outcome of execution of the contracts may be different but the contracts were for the similar purposes. It can be noticed from the above reproduced portions of our Final Order, an identical issue in respect of Turbotech Precision Engineering Pvt. Ltd. was before the Honrable High Court of Karnataka that being an issue in respect of consulting engineer service providing design development, design review, installation and commissioning and other services. It is to be noted that Revenue had filed an appeal before Honrable High Court against the order of Tribunal in that case. Honrable High Court has categorically held that if the contract is a works contract, then the service tax liability will only arise from 01/06/2007. The facts of the current case before us and the case before the Honr....