TaxTMI 
TaxTMI 
2011 (2) TMI 98
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 and 78 of the Finance Act, 1994 (the Act). The penalties imposed include equal amount of penalty, as the Service Tax demanded, under section 78 of the Act. As per the show-cause notice, the appellant was engaged in executing various items of work on turnkey/EPC basis for departments of different State Governments. As per the impugned order, the work constituted taxable service classified as works contract under section 65(105)(zzzza) of the Act. The impugned work carried out under nine contracts relates to water supply/lift irrigation/sewage pumping. The impugned order summarises the activity undertaken by the appellants, its disputed liability and the important basis for resisting the demand as follows :- "The essential point to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and "Dam" is given specific exclusion from the purview of Works Contract Service. They argued that Canal is part of the "Dam" and should not be seen in isolation." Apart from the above, the impugned order does not discuss the nature of the work undertaken by the appellants but discusses the case of the Revenue and the party's contentions based on statutory provisions and clarifications thereof. 2. The main argument of the appellants against the demand confirmed is that the work undertaken by them squarely fell under clause (c) of CBEC Circular No. 116/10/2009-ST, dated 15-9-2009. They had rendered service in relation to infrastructure provided by different State Governments. As per the Circular cited, such activities did not attract S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons, we find that the case of the appellant is that the activity in dispute fell under clause (ii )(b) of the Explanation in section 65(105)(zzzza) of the Act, which defines taxable service of 'works contract'. The Revenue's case is that the impugned activity fell under sub-clause (ii)(e ) of the same Explanation. The Explanation to section 65(105)(zzzza) is reproduced below :- "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 plan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the said services may be covered under the 'works contract'. The definition of 'works contract' services is reproduced herein below :- "Section 65(105)(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, machiner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ings or infrastructure construction etc. through EPC (Engineering Procurement & Construction) mode. The said service is covered under section 65(105)(zzzza ) of Finance Act, 1994. The said section itself excludes works contract in respect of dams, tunnels, road, airports, railways, transport terminals, bridges & tunnels executed through EPC mode. Hence, works contract in respect of above works even if done through EPC mode are exempt from payment of Service tax." It can be seen from the above reproduced clarification given by the Board that infrastructure activities, which are concerned with welfare activity, for the citizens of this country has been excluded from the liability of Service tax." 6. We also note that the CBEC Circular N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....refor. Thus, if an activity does not result in emergence of an erected, installed and commissioned plant, machinery, equipment or structure or does not result in installation of an electrical or electronic device (i.e. a machine or equipment that uses electricity to perform some other function) the same is outside the purview of this taxable service. (iii) 'Works Contract' incorporates the inclusions and exclusions of the aforementioned two taxable services (amongst others) and it is the nature of the contract (i.e. a contract wherein the transfer of property in goods involved is leviable to a tax as sale of goods) rather than the nature of activities undertaken, that distinguishes it from the previously stated taxable services. Th....