TaxTMI 
TaxTMI 
2014 (12) TMI 712
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....42/- 2 M/s. MCC PTA India Corporation Pvt. Ltd. [Project No. 501] June 2007 to February 2010 41,98,889/- 3 M/s. SAIL ISSCO Steel Plant [Project No. J-529] August 2009 to March 2012 52,80,622/- Total 1,80,10,453/- 2.1 In the case of M/s. Air Liquide North India Pvt. Ltd. the allegation is that after paying service tax under ECI service on full value at full rate of 12.36% they later changed the classification to WCS service which is not permissible as per Rule 3(3) of Composition Scheme and paid service tax only on abated value of 33% of the gross amount received, under Notification NO. 1/06-ST. It was also alleged that the abatement cannot be availed as the appellant had availed input service credit of Rs. 2,69,580/- on input services. In respect of second and third customers namely, M/s. MCC PTA India Corporation Pvt. Ltd. & M/s. SAIL ISSCO Steel Plant, the allegation was that the contracts undertaken are specifically covered under ECI and hence are not classifiable under WCS service as done by the appellant. Further, the contracts stipulate the "supply" and "installation" components of the total services rendered but tax is paid only on the "supply" par....
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....10-ST dtd. 24.08.2010 .... [Para 3 &4] 3. Nagarjuna Construction Company Ltd. - 2010 (19) STR 321 (A.P.) .... [para 21] 4. Nagarjuna Construction Company Ltd. Upheld by Supreme Court - 2012 (28) STR 561 (SC) .... [Para 27] 4.2 He also relied on the case of Gammon India Ltd. reported in - 2014-TIOL-1344-CESTAT-MUM allowing benefit of Works Contract Service Scheme even if two separate Orders were placed for supply and service component. He also stated that as per CBEC Circular No. BI/16/2007-TRU dtd. 22.5.2007, the contracts which are treated as Works Contract for the purpose of levy of VAT shall also be treated as Works Contract for the purpose of levy of service tax. 4.3 Lastly, his contention is that under these two contracts they had only availed credit of service tax on input services which is not barred under Rule 3(2) of the Works Contract Composition Scheme. The bar is only on availment of credit on inputs. 4.4 Regarding time bar the ld. counsel stated that as far as M/s. Air Liquide North India Pvt. Ltd. is concerned, the payment of service tax under ECI is evident from ST-3 returns. Similarly, payment of service tax under WCS compo....
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....y the appellants. We will take up the matter, contract wise. In the first contract, i.e. M/s. Air Liquide North India Pvt. Ltd., we find that revenue has not been able to justify why abatement of 67% under Notification 1/06 should not be made available for the period April 2008 onwards. Merely because the benefit of Notification could not be availed earlier is no justification to deny the same for the later period. Revenue has not examined the facts properly. The appellants have nowhere stated that they opted for the WCS scheme. Table under para 22F of the show-cause notice clearly shows that the appellant continued to pay service tax under ECI service after taking abatement of 67% from April onwards. The appellant never changed the classification to WCS service. This is only an assumption made by the revenue without any basis. The appellants have been able to show in detail how the ECI service undertaken by them involved supply of materials and equipments relating to foundation and fabrication and erection of structural items. They have placed on record a certificate issued by DGM showing that the work executed comprise of materials. Interalia, such as SS and MS pipes. They also p....
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....plates etc. to name a few. The contract agreement with SAIL under article 4.1 defines the scope as "work supplies and services." The same article indicates supply by the contractor of all erection material, all enabling works for e.g. temporary roads, temporary drains etc. Ld. counsel also showed documents titled "package-erection of BOF & CCP - Equipment" which shows that various technological equipment which is also being supplied such as hot metal handling facility, scrap handling equipment, block material charging system, water gas cooling, ventilation system etc. Invoices are placed on record to show payment of service tax on value including material supplied. In view of the above details, it is not understood how revenue has come to say that material supplied is incidental. In any case, there is no provision in law which defines the incidence of material supplied in a works contract. A coordinate bench has decided the matter in the case of Gammon India Ltd. (supra) as below. "7. Having seen the definitions of 'Works Contract' and 'Erection, Commission and Installation' Services, we proceed to analyze ....
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....riate and misconceived and we do not agree with Revenue. It is also observed in para 40 of the adjudication order No. 04/ST/2010/C dt. 30.03.2010 (Appeal No. ST/437/2010) that pure labour services, where there is no transfer of property, would be covered under 'erection, installation and commissioning' service. The assumption appears to be that in the said Service contract entered into by appellants with Power Grid Corporation of India Ltd., there is no transfer of property in goods. This assumption is based on incorrect appreciation of facts. The records shown by appellants indicate that a significant percentage of the total contract work under the 'Service Contract' involves material component. Therefore we hold that there is transfer of property in goods involved in the execution of the Service Contract. 7.3 Coming to the next aspect, whether the transfer of property is leviable to tax as sale of goods, we note that the appellants pay Sales Tax/Vat on the transfer of property in the goods involved in execution of the Service contract. Copies of VAT returns have also been placed on record. Therefore, the second aspect that goods in the Service Contract....
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....e that the appellants are eligible to work under the WCS service. Therefore, the question of abatement under Notification 1/2006 is not relevant. As far as eligibility to the Composition Scheme is concerned we find that three elements are required to be fulfilled for eligibility to Composition Scheme, namely:- (i) There must be transfer of property in goods involved in the execution of such contract. (ii) The provider of the service must not have taken Cenvat Credit on the inputs. (iii) The provider of the service must exercise such option to avail the Composition Scheme. Out of the above conditions, it is noted that there is no doubt that the first and last elements have already been met. The third element is that the provider of the service must not have taken credit on the inputs. We find from the Order-in-Original para 36 & 37 that the Adjudicating Authority has clearly mentioned that the appellant have availed input service credit amounting to Rs. 2048970 and Rs. 1555107 respectively. Therefore, the statement of ld. AR in the written submissions that the Cenvat Credit has been availed on materials is not a correct st....