TaxTMI 
TaxTMI 
2012 (4) TMI 456
X X X X Extracts X X X X
X X X X Extracts X X X X
....on contract basis. The Wind Turbine Generators (in short WTG) are manufactured and supplied by M/s SEL. It had taken Service Tax Registration for installation & commissioning services on 18.7.2003 which was subsequently amended to endorse other services also. 2.1 Based on intelligence that M/s SIL was indulging in evasion of service tax under the category of "Erection, Commissioning or Installation service" as defined in Sec, 65(39a) of the Finance Act, 1994, the officers of Directorate General of Central Excise Intelligence (DGCEI), New Delhi conducted investigation into the matter. In the course of investigation, the officers examined the relevant records and recorded statements of some of the functionaries of the appellant company. In his statement dated 27.10.2005, Shri Bipin Shah, General Manager had, inter alia, stated that their company is engaged in project execution work comprising civil construction work, erection installation and commissioning of WTG on exclusive basis to the customers of M/s. SEL as per Agreement dated 11.6.2005 entered into between M/s. SEL and the appellant company. 2.2 Similarly, in his statement dated 7.11.05 Shri Harish H. Mehta, Director of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... invoices mentioned at Sr. No. (i) and (ii) above, it was availing the benefit under Notification No.19/2003-ST dated 21/8/2003 which provides that in case of a contract involving erection, commissioning or installation services along with the supply of plant, machinery or equipment, service tax will be payable only on 33% of the gross amount charged by the service provider from its customers for erection, commissioning or installation and supply of plant, machinery and equipment, 2.6 Since M/s. SIL was providing only the services of erection, commissioning or installation of WTGs, it appeared that it was not eligible to the benefit of Notification No. 19/2003-ST dated 21.8.2003. M/s. SIL, was, therefore, served with a show-cause notice dated 28.8.2006 demanding service tax of Rs. 22,04,53,114/- and Education Cess of Rs. 44,09,131/- for the period 10.9.04 to 30.9.2005. The notice also proposed to impose penalty on it under Sec. 76 for contravention of provisions of Section 68 and penalty under Section 78 of Chapter V of the Finance Act, 1994 for evasion of service tax by wilful suppression of facts. The notice also demanded interest on the service tax not paid during the period ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....trial construction service" and that the sub-contractor has paid service tax of 33% of the gross amount charged from the appellant by availing the benefit of Notification No. 15/2004-ST dated 10.9.2004 as amended. Similarly, electrical work has been done by a subcontractor who is registered under the category of 'Erection, Commissioning or Installation service' and has discharged service tax on the entire gross amount charged from the appellant without claiming any abatement under Notification No. 19/2003-ST dated 21.8.2003 as amended. Hence the appellant has claimed benefit of Notification No. 19/2003-ST dated 21.8.2003 as amended. 4.3 The Ld. Sr. Advocate finally limited his submission to supply and installation of electrical equipments. He contented that erection, commissioning or installation of electrical equipments is a separate activity having no relation to erection, commissioning or installation of windmill or WTGs. In this connection, he relied upon the decisions of the Hon'ble Supreme Court in the case of Nicco Corporation Ltd. v. CCE, 2006 (203) ELT 362 (SC), Skytone Electricals (India) Ltd. v. Commissioner 2008 (225) ELT A 97 (SC) holding that wires and cables are n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f bona fide belief. The appellant is guilty of suppression of facts. It had not declared the correct value of taxable services in ST. 3 returns filed with the department. It had suppressed the fact from the department that it had availed the benefit of Notification No. 19/03-ST dated 21.8.03 although it did not supply WTGs to its customers. Therefore, the extended period of limitation has been correctly invoked in this case. In his submission, the appellant has no case both on merit as well as on limitation. He, therefore prayed for dismissal of the appeal. 6. We have carefully considered the submissions of both sides. We have also examined the relevant records including the impugned order and the written submission filed earlier by both sides. 7. We find that the following issues arise for our consideration:- (I) Whether the appellant's contracts with its customers are composite contract for "erection, commissioning or installation of Wind Farm Project of which electrical installation is a part, as contended by the Revenue or the electrical work is a separate activity distinct from Wind Farm Project, as contended by the appellant ; (II) Whether the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; ♦ Labour for Erection of towers & WTG and installation & commissioning of WTG. ♦ All the material for erection installation and commissioning & the technical guidelines will be supplied by SDPL. (D) Loading & Unloading ♦ Loading and unloading and material security at our site (E) Temporary road for movement of crane and preparation of crane platform. PRICE The price shall be Rs. 75.00 lacs per WTG totalling of Rs. 150.00 lacs for 2 nos. WTGs for the scope of activities as mentioned at clause 1 above. The break up of this price shall be as below: Sr. No. Description Amount per WTG Amount for 2 Nos. of WTGs (Rs. In Lacs) 1. Windmill project execution (for 74 Mtrs. Hub height tubular tower) Civil Work including windmill foundation, control room, transformer plinth, electrical yard fencing, temporary road for movement of crane and preparation of crane platform 31,00 62.00 2. Erection & installation of windmill including loading, unloading & material handling 13.00 26.00 3. Supply and installation of HT electrical system Including cab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wer project. HHL will provide all the relevant documents and support to Suzlon. 6. General Terms ♦ This order is subject to jurisdiction of Mumbai. ♦ This order is subject to Force Majeure conditions as per your offer. ♦ This order is subject to Standard Arbitration. Kindly return us a copy of Work Order duly signed as acceptance to the terms and conditions mentioned above and issue a receipt for the amount paid. Thanking you, Yours faithfully, For Hercules Hoists Limited Sd. M.S. Saigal (President) 9.1 On perusing the Work Order we find that it is for erection and installation of 2 Nos. of WTGS (1250 KW each) at Dhulia Site in Maharashtra. We also find that in the Work Order indicates Scope of work which includes the following under the board heading of- (A) Civil, (B) Electrical,. (C) Erection & Commissioning, (D) Loading & Unloading, (E) Temporary road for movement of crane and preparation of crane platform. 9.2 At page 2 of the Work Order, the price per WTG is shown as Rs. 75 lakhs and then price break-up is shown in the tabular form under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f generating and selling electricity through the ownership of WTGs. C. The Services are provided to the Company or to the customers of the Company, on an exclusive basis, for the purposes of setting up windfarm projects. The agreement defines "Services" as follows"- "Services" mean all of the services required for the erection, installation and commissioning of the windfarm project including, without limitation, the following services: a. development of infrastructure for setting up of wind farm project including construction of evacuation facilities and construction of approach roads; and b. laying of foundation and erection, installation and commissioning of WTG, construction of control rooms, construction for the transformers, construction of evacuation facilities, construction of approach roads; and c. all related electrical work including material. 3. Agreement for Services 3.1 SDL shall provide the Company with such information as it requests from time to time in order to submit proposals to Customers for setting up WTGs. 3.2 SDL hereby undertakes that it shall offer to provide all or any of the Services to Cus....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... way contravene any Applicable Laws; (e) It shall ensure that it complies with Applicable Laws in the conduct of its business. The Company undertakes that a. It shall notify SDL about the terms of the arrangement with the customer in relation to the "integrated solutions" offered to the customer."(emphasis supplied) 10.1 On a careful examination of the various clauses of the "Agreement for Services" reproduced above, we find that the company (M/s. SEL offers "total solutions" to its customers in establishment of windfarm project including civil work and installation and commissioning of WTGs and in this endeavour the appellant (M/s. SIL) provides the required services (as defined in the Agreement) to the customers of the company. It is quite obvious from "Agreement of Services" that the appellant has to provide "integrated solutions" to the customers in wind power generation. From the definition of "Services" as reproduced above, we note that the services required for the erection, installation and commissioning of the windfarm project, inter alia, include all related electrical work including material. Reading the definition of "Services" toget....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... composite contracts for erection, commissioning or installation of Windfarm Project of which electrical installation is a part. Consequently, we hold that electrical installation is not a separate activity distinct from Windfarm Project. Issue No. II 11. We shall now examine the issue No.(II) that is, whether the appellant is eligible for the benefit of Notification No. 19/03 ST dated 21.8.2003 in respect of electrical installation. It is the contention of the appellant that while providing the service of "erection, commissioning or installation" of electrical installation to its customers, it has also supplied the material including wires and cables required for the same. Hence it is eligible for the abatement under the aforesaid Notification.) For the sake of convenience, we reproduce the Notification itself inserted by Notification No. 12/2004 ST dated 10.9.2004. "NOTIFICATION No. 19/2003-S.T., DATED 21-8-2003 In exercise of the powers conferred by section 93 of the Finance act, 1994(32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided to a customer in relation to erect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustomers under separate invoices. One such invoice dated 7.2.2005 issued by M/s. SEL to M/s. Hercules Hoists Limited is found at page 17 of the Revenue's written submission. The relevant portion of the invoice is reproduced below for better understanding and appreciation. "SUZLON ENERGY LTD, Plot No. H-24/25 M.G Udhyog Nagar, OIDC Industrial Estate, Near Water Tank, Dabhel, Daman 396 210 (U.T.) India ST No. DI-600 dt.26.09.1996 C.ST. No. DI/CST/371 DT. 26.09.1996 INVOICE To. M/s. Hercules Hoists Limited 110. Minerva Industrial Estate Mulund (West) Mumbai 400080 Delivery Address: M/s. Hercules Hoists Limited Village : Petle Taluka : Sakri District: Dhuie Maharashtra P.O. No.: PO45-00221-A Date : 18/11/2004 Invoice No: SEL/DAMAN/SUPPLY/2004-2005/055 Date : 28.02.2005 Reference No. 7444000055 Sr. No. Description Qty. Rate Per Unit (Rs.) Value in Rupees 00020 Supply of SUZLON WTG 1.25MW S66 TubTcwr72M Ht (Ex works Daman) Wind Turbine Generator comprising mainly of : ♦ Nacelle ♦ Hub and Set of 3 Blades &di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial including some electrical items was only incidental to the services of "erection, commissioning or installation" of WTGs. Secondly, in terms of the Agreement for the Services dated 11.6.2005 between M/s. SEL and the appellant as also in terms of various Work Orders placed on the appellant by its customers, there cannot be any doubt that the contracts were composite contracts for providing services of erection, commissioning or installation of WTGs. Thirdly, civil works and electrical works are inseparable parts of Wind Farm Project. It is needless to say that without civil foundation, erection of tower is not possible. Similarly, without electrical installation, commissioning of Wind Mill is not possible inasmuch as electricity generated by WTGs cannot be evacuated from the Wind Mill to the Electricity Board. 11.6 We find that in his findings the Commissioner has observed that the mere issue of 4 different invoices would not make the activities independent of each other. The Agreement for Services specifies the service as services required for erection, installation and commissioning of Windfarm Project. In his findings, he has observed that the entire gamut of the instal....