TaxTMI 
TaxTMI 
2011 (3) TMI 1261
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....g Construction Corpn. Ltd. (NBCC in short) entered into contract with M/s. NTPC on 1st January, 2004 to undertake site preparation, site leveling works in connection with setting up of a super Thermal Projects by M/s. NTPC. The contract was for Rs. 118.00 crores and there was provision for price escalation as well. NBCC in turn entered into contracts with M/s. APR constructions Ltd. (APR in short) and Sri Avantika Constructions (SAC in short) for undertaking the actual work of site levelling, site formation etc. and paid a sum of Rs. 31.00 crores approx. to SAC and a sum of Rs. 61.00 crores approx. to APR during the period 10-9-2004 to 31-3-2007. 2.2 Original authority by the impugned order held that NBCC has rendered service of sit....
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.... by them (NBCC) to the sub-contractors and sought to demand tax under business auxiliary service. There is no question of any service being rendered by NBCC to the sub-contractors and only the sub-contractors are rendering services to NBCC. He fairly submits that the amount of Rs. 1.65 crores taken as towards construction may have to be treated only as charges towards site formation services and therefore their availing abatement of 67% may not be correct. He also submitted that in respect of service charges attributable to the service of site formation for from the period 16-6-2005, they have paid service tax amounting to Rs. 3.3 crores approximately. 3.2 Ld. Advocates appearing for the sub-contractors submitted that they have no c....
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.... part of the realization relates to the services undertaken by them for the period prior to 10-9-2004. They also submit that since NBCC has paid service tax under the category of site formation services w.e.f. 16-6-2005, the question of demanding on the very same activities from the sub-contractors under a different category as business auxiliary service does not arise. 4. Ld. Special counsel appearing for the Department submits that the activities covered by the contract between NTPC and NBCC has been partly sub-contracted to the sub-contractors mentioned above. In executing the work by the sub-contractors, NBCC has also rendered services like by providing management services including supervision, raising bills, collecting payment....
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....es and a sizeable part of the amount has been given to the sub-contractors for the work actually undertaken by them. The margin of about 14% retained by NBCC is treated as if it is consideration given by the sub-contractors to M/s. NBCC for the services allegedly rendered by NBCC to the sub-contractors. We are not able to, prima facie, agree that NBCC has rendered any services to the sub-contractors. We do not find any payment from the such contractors to NBCC. Therefore the question of taxing either 14.1% margin retained by them or other portion of money received by NBCC from NTPC as representing services rendered by NBCC to the sub-contractors may not arise. 5.3 We also, prima facie, find that the sub-contractors have rendered, in....