TaxTMI 
TaxTMI 
2015 (3) TMI 303
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....ut the said work, the executive agencies were entitled to 10% of the project cost as their charges/fees. The executive agency, in turn, floated tenders and appointed qualified contractors/sub-contractors for execution of the said job of construction of border outpost. The service tax Department, issued demand notices to the executive agencies as well as to the contractors/sub contractors, demanding service tax under the category of erection, commissioning or installation service as defined under Sec. 65(39a) read with Sec. 65(105)(zzd)of the Finance Act, 1994. On adjudication, the demand notices have been confirmed and penalties imposed on the respective appellants by the adjudicating authority and in one case the appeal carried out by the appellant against the order of additional Commissioner which was rejected by the ld. Commissioner (Appeals). Aggrieved by these orders the appellants preferred the present appeals before this forum. For understanding the issues, instead of narrating the facts of each of the Appeals, it would suffice to discuss the facts mentioned in Appeal No.ST/A/366/12 filed by M/s. Mackintosh Burn Ltd. & M/s NPCC. 3. M/s. Mackintosh Burn Ltd., during the re....
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....rcial or Industrial Construction Service as defined under Section 65(25b) read with Section 65(105)(zzq) of the Finance Act, 1994. It is his submission that since the services rendered by the Appellant, are non-commercial in nature, therefore such construction services are excluded from the scope of the taxable Entry, Commercial or Industrial Construction Services . 6. Elaborating his argument, he has referred to the meaning of the term, Erection, Commissioning, Installation , mentioned under various dictionaries. It is his submission that on a plain reading of the dictionary meaning of these words, it could be discerned that these words standing alone could not be considered as rendering of the services of erection, commissioning or Installation. Thus, the conjunction OR contained in the said definition of erection, commissioning or installation, be read as AND , so as to bring the said activities under the scope of the said service of Erection, Commissioning or Installation Services. 7. He drew support to the aforesaid argument from Board s Circulars bearing No.80/10/204-ST dated 17.09.2004 and 123/5/2010-TRU dated 24.05.2010. It is his contention that in both the circulars....
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....r Installation Services , would not be satisfied. 9. The ld. Advocate also argued that the Structure mentioned under clause (i) of the definition of erection, commissioning or installation service refers to mechanical/technological structure only and not civil structure. Civil structures are covered under Construction Service . The aforesaid conclusion can be reached by applying the broad principles of Noscittur a Sociis, as the meaning of structure under clause (i) to be read in the context and the company of words, where it appears. The word, Structure , read in the cognate sense and keeping in mind the company it keeps, would draw its colour from its companion, which is covered under clause (i) of Section 65(39a) of the Finance Act, 1994 and not civil structures covered under the scope of Section 65(25b) of the said Act, which deals with immovable properties only. Further, rebutting the contention of the Department that under clause (ii) of Section 65(39a) of the said Act, plumbing, drain-laying or other installations are covered, hence the activities thereunder, are not only confined to plant, machinery, equipment etc., but it would include civil structure also. The ld. Advo....
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....overnment of West Bengal; hence, there cannot be any suppression of facts with intent to evade payment service tax, warranting invocation of the extended period of limitation and imposition of penalty. In support, he has also referred to the decisions of the Tribunal in the case of CCE vs. Nepa Ltd., 2013(298) ELT 225(Tri.) and U.P.State Sugar & Cane Development Corporation Ltd. vs. CCE, 2009(242) ELT 260(Tri.). Further, he has submitted that the Ministry of Home Affairs, Department of Border Management, vide its letter dated 06.02.2012, had clarified that the activity of border-fencing is covered under the Centrally Sponsored Scheme (CSS) and directly implemented by the Central Government/State Government Agencies. The Finance Ministry, vide its letter F.No.137/39/2010-CX-4 dated 25.03.2010 addressed to the Ministry of Home Affairs, had opined that the activity of border-fencing is taxable under Section 65(39a) of the Finance Act, 1994. 12. Arguing for M/S. Engineering Projects (India) Ltd., the executing Agency, the Ld. Adv. has submitted that under the MoU, the Appellant were required to carry out (i) Detailed survey of the plot of land etc.; (ii) Finalization of alignment in....
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....ing invocation of the extended period of limitation and imposition of penalty. 13. The Ld.Advocate Mr.Saraf appearing for the Appellants (Appeal No.ST-558/11, ST-560/11, ST-370/11, ST-371/11 AND ST-372/11) has submitted that it is a settled position of law that when a taxing statute does not define a term then it has to be interpreted in accordance to its meaning as understood in common parlance. In support, he has referred to the decisions of Hon ble Supreme Court in the case of CCE, New Delhi vs. Connaught Plaza Restaurant (P) Ltd. 2012 (286) ELT 321(SC), Naturalle Health Products (P) Ltd. v. CCE, Hyderabad 2003 (158) ELT 257(SC), Commissioner of Trade Tax, UP vs. Kartos International 2011 (268) ELT 289 (SC), CCE, Hyderabad vs. Fenoplast (P) Ltd. (II) 1994 (72) ELT 513(SC), Dabur India Ltd. vs. CCE, Jamshedpur 2005 (182) ELT 290(SC). Also he has referred to a circular of the CBEC bearing No.57/2003-CUS dated 27.6.2003 where it is verified that if a taxing statute does not define a term it has to be interpreted in accordance with the meaning of the term In common trade parlance. In view of the aforesaid principle of law, the word structure since not been defined in the Finance ....
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.... rendered by all the contractors had been done on the basis of the main project ignoring individual nature of services. He has submitted that all these appellant-contractors had not rendered the services of construction of fencing. For example Mr. Chinmoy Saha (Appeal No.ST-560/11) have only carried out construction of RSCC tags, bridges, Mr.Sibu Saha (Appeal No.ST-372/12) have undertaken only construction of roads. Thus these activities are clearly classifiable under the category of commercial or industrial construction and not taxable. Further, he has submitted that extended period of limitation cannot be invoked in the present case as the issue involved is interpretation of law.In support he has referred to the decision of Hon ble Supreme Court in the case of Uniflex Cables Ltd. vs. CCE, Surat-II 2011 (271) ELT 161(SC). 15. The ld. Advocate, Smt.Shruti Pradhan, appearing for the Appellants, M/s Suprada Industries Ltd. (Appeal Nos.ST-357/12, ST-358/12, ST-354/12 & ST-360/12), submitted that the Appellants have been awarded the job by the National Project Construction Corporation Ltd. ( M/s NPCCL), who was an executing Agency for construction of border fencing at different loca....
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.... been referred to civil structure of all kind to include fencing and railing within its scope, which clearly demonstrate that the law did not equate structure for fencing and railing or vies-versa. Referring to the dictionary meaning of the word Fencing , the Ld. Chartered Accountant submitted that none of the meanings prescribed in dictionaries, fencing has been described a structure or anything akin to a structure. It is his submission that the ordinary meaning of fencing cannot be structure. Therefore, even if few dictionaries refer to fencing as structure, the benefit of doubt on its meaning should be in favour of the tax payer. In any sense, fencing is never referred to as a structure and structure essentially means a large opaque edifice or building for machinery where fencing is not. Similarly, referring to the meaning of word structure in various dictionaries, the Ld. Advocate submits that structure does not include fencing. Structure essentially means and refers to a complex edifice, entity, construction, building plans or even human body. Further, he has submitted that Border Fencing work carried out by Ministry of Home Affairs at different parts of India including intern....
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....down drains is in view of the Act Border Fencing and as such activities are wholly and exclusively for the nation and can be classified under the ambit of rendering a sovereign function and is not for a commercial purpose so as to attract Service Tax. The Ld. Advocate referred to the judgment of the Tribunal in M/s. Nagarjuna Construction Vs. CCE -2010 (19) STR 59 wherein it is held that the Act of designing, building and operating the water together that the drain pipes is not for the sale but for the state and is incidental for the primary use of distribution of water Act does not attract Service Tax. Further, she has submitted that the act of Border Fencing does not wholly attribute to the act of erecting, fencing but also involves laying cables alongside the roads, clearance of jungles as well as the act of shifting the overhead cables and also the construction of roads as much as widening the road etc. The Ld. Advocate referred to the circular of the Board bearing No. 123/5/2010-TRU dated- 24th May, 2010 with aforesaid activities do not attracts Service Tax under Section 65 (105) (zzzd) of the Act. Further, she has referred to the judgment of National Building Construction Ltd....
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....eful reading of the aforesaid provisions namely, clause (39a) of Section 65 of the Finance Act, 1994, i.e. erection, Commissioning or Installation Services , it could be seen that the disjunctive word or has been invariably used before the word, Installation in each of the aforesaid provisions. Besides, in clause (39a)(i), or has been used a second time preceding the word, Structure . It is the case of the Revenue that the word, or in all these provisions, should be taken as a particle connecting words, phrases or classes as alternatives and disjunctive in the absence of any legislative intent to the contrary. In support, he refers to the judgment of the Hon ble Supreme Court in the case of Municipal Corporation of Delhi vs. Tek Chand Bhatia, AIR 1980 SC 360 and Fakir Mohd. (Dead) by LRs vs. Sita Ram, (2002) 1 SCC 741. It is his submission that in the present case, the Appellant had failed to establish that there had been a manifest intent of the legislature, as could be evident from any part of the same statute, so as to justify the interpretation of the disjunctive word, or as and . Therefore, he submits that the ld. Adjudicating Authority has correctly held that the words, Erect....
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.... filter, water heater etc. was covered by the definition, Commissioning or Installation Service , as all these are machinery, plant or equipment. Thus, composite service of commissioning and installation in a plant, was considered as not necessary, by the Board for classification of installation of those articles in a residential complex under sub-clause (zzd) of Section 65(105) of the Finance Act, 1994. He also submits that installation of electronic devices, plumbing etc. was not specifically inserted in Section 65(39a) of the said Act, till 16.06.2005. After insertion of the word, Erection 65(39a) of the Act ibid, with effect from 10.09.2004, and the word, Structure , from 01.05.2006, it would be only logical to construe that erection of structure would be covered by the definition of Erection, Commissioning or Installation in Section 65(39a) of the said Act, for purposes of classification of the said service under sub-clause (zzd) of Section 65(105) of the said Act. Further, distinguishing the Circular dated 24.05.2010, the ld. Special Counsel submitted that it is clarificatory in mentioning that if an activity does not result in emergence of an erected, installed and commissio....
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....d. Special Counsel that structure be understood in the sense in which it is appearing with the words, machinery, equipment . He also submits that the said principle is not applicable to the present scenario, in view of the judgment of the Hon ble Supreme Court in the case of Grasim Industries Ltd., vide 002(141)ELT 593(SC). He also submits that in the present case, the preceding words do not constitute mere specifications of a genus, but constitute description of a complete genus. Further, he referred to the judgment of this Tribunal in the case of Shakumbari Sugar & Allied Industries Ltd., 2012(283)ELT 216(Tri.Del.). He also contends that erection of structure cannot be read ejusdem generis with commissioning or installation of plant, machinery or equipment, since to plead the terms, machinery, equipment or structure succeeding the term plant in Section 65(39a) of the said Act, should be read ejusdem generis with plant, would amount to rendering those terms, as redundant. 26. The ld. Special Counsel also contends that the contention of the ld. Advocates for the Appellants that the services provided by them under Centrally Sponsored Scheme (CSS) were not taxable, does not hold g....
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....ice tax fastened on the sub-contractors, has been settled in view of the decision in the case of Sunil High-Tech Engineers Ltd., vide 2014-TIOL-541-CESTATE-MUM. Further, he argued that the demands are correctly confirmed invoking the larger period of limitation. In this context, he has referred to the decision of this Tribunal in the case of Anand Transformers (P) Ltd., 2014(33) STR 314(Tri.Del.), in submitting that the Appellants had neither registered themselves with the Department, even though they were well aware of the fact that service tax was required to be discharged on the activities carried out by them, therefore, the ld. Commissioner has rightly confirmed the demands, invoking the larger period of limitation. 28. Heard Advocates for the Appellants and the Spl. Counsel, Shri A.K.Raha for Revenue at length. From the factual matrix narrated, we find that the Ministry of Home Affairs by entering into Memorandum of Understandings (MOUs in short) with M/s. National Projects Construction Corporation Ltd. (M/s. NPCC in short), M/s. Engineering Projects (India) Ltd. M/s. EPIL in short), the execution Agencies, entrusted the work of construction of Border Out Posts (BOPs in sho....
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....ect allocated to it and shall prepare a comprehensive estimate for the project after identifying the type of fencing required as per site conditions and as finalized with BSF. This estimate shall be prepared on the basis of CPWD norms wherever applicable and on the basis of market rate analysis where CPWD rates etc. are not applicable. This estimate should be comprehensive and should include for but not limited to the following": i) Survey and field investigations ii) Jungle clearance & cutting of trees iii) Fencing (As per type required) with access gates iv) Retaining Wall, earth filling, earth cutting v) IBB Roads as per type required vi) Link roads/access roads to BOP and from PWD roads vii) Pipe Culverts viii) Patrolling track along the fencing ix) Cost of land acquisition x) Cost of Security cover xi) Other enabling works xii) Provision of contingencies, local charges, agency charges etc xiii) All as required for assessing the completion cost of the works 4. The estimate shall be submitted to the Border fencing and roads cell under ADG (Border), CPWD for vetting. The approved cost for this work shall be as per estimates scrutinized by....
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....ted damages shall be 2% (Two percent only) of the balance value of work for each month of delay beyond stipulated time of completion subject to a maximum of 10% (ten percent of the balance value of work. 10. EPI will submit to MHA monthly report indicating physical progress, financial progress etc. for each project. While executing this project, EPI will strictly implement the quality control and quality assurance functions as per EPI's Quality Plan and as per CPWD norms. 11. EPI shall be responsible for rectification of defects during defect liability period of 12 months after completion of the works. EPI shall appoint a Nodal Officer at Delhi who shall co-ordinate the various activities of Co-ordination and Monitoring of the projects. While further details and estimates are being processed. EPI shall start the pre-construction activities on the basis of this MOU. Signed at New Delhi on this day as mentioned above. For and on behalf of For_and on behalf of Sd/- Sd/- (P.K.PATHAK) (A.S.KHARB)) Ministry of Home Affairs Addl. General Manager New Delhi Engineering Projects (India) Ltd. For MINISTRY OF HOME AFFAIRS (A Govt. of India Enterprise) Co....
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....sired quality and quantity shall be in the scope of the Contractor. The cost of this shall be deemed to be included in his quoted rates ard nothing extra shall be payable to the Contractor on this account. 30. In the present batch of Appeals, thus, there are two categories, namely (i) the Executive Agencies; and (ii) the contractors who had carried out the work, consequent upon the agreement between them and the Executive Agencies for undertaking the respective works relating to the construction of BOPs which include Fencing of the Boarder. It is relevant at this stage, to mention that the service receiver in this case, is Ministry of Home Affairs(MHA) who had appointed M/s. NPCC and M/s. EPIL for execution of the Project of Construction of BOPs. The said executing Agencies and the Contractors/sub-contractors in turn, appointed by the Executive Agencies, for carrying out various works are the service providers. 31. Ld. Advocates for the Appellants assailed the impugned Orders on merit broadly on two counts. It is argued that the activities of boarder fencing carried out by the contractors as well as by the Executive Agencies, were not in the nature of Erection, Commissioning ....
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....mmissioning or installation agency in relation to commissioning or installation of plant, machinery or equipment (29) commissioning and installation agency means any agency providing service in relation to commissioning installation (105) taxable service means any service provided - (zzd) to a customer, by a commissioning and installation agency in relation to commissioning or installation : (B) with effect from 10-9-2004: Section 65. Definitions - In this Chapter, unless the context otherwise requires, - (39a) erection, commissioning or installation means any service provided by a commissioning and installation agency in relation to erection, commissioning or installation of plant, machinery or equipment (29) commissioning and installation agency means any agency providing service in relation to erection, commissioning or installation (105) taxable service means any service provided or to be provided - (zzd) to a customer; by a commissioning and installation agency in relation to erection, commissioning or installation; ( C) with effect from 16-6-2005: Section 65. Definitions - In this Chapter, unless the context otherwise requires,- (39a) erect....
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....tion to plant, machinery or equipment. Later the word erection was added to the same and the activity of Erection, Commissioning or Installation in relation to plant, machinery and equipment, was subjected to service tax, when rendered by a commission or installation agency. Commissioning or installation agency is defined at clause (29) of Sec.65 to mean any agency providing services in relation to Erection, Commissioning or Installation . The expression, structure-pre fabricated or otherwise added subsequently. 36. The ld. Special Counsel for the Revenue has vehemently argued that after insertion of the expression, structure whether pre-fabricated or otherwise , the scope and scheme of levy of service tax under the category of Erection, Commissioning or Installation Service , has undergone a total change. In other words, his argument is that, even though the word structure is also mentioned in the definition of Commercial or Industrial construction service , but when erected, would fall under the scope of Erection, Commissioning or Installation Service after 01.05.2006, the effective date from which the expression structure-pre-fabricated or otherwise has been inserted. This ar....
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....for Erection, Commissioning or Installation Service , an erection charge would be taxed as part of the commissioning or installation Service. Thus, the legislators are fully aware of the situation that the activity of erection , though fall under the category of Construction Service , but in a composite contract, the charge collected on this account would also be taxed under the category of Erection, Commissioning or Installation Service . To add further, it could safely be inferred that it was not the intention of the legislature to tax the activity/service of erection separately in relation to the objects of levy viz. plant, machinery or equipment, but it is a necessity to be taxed being carried out along with commissioning or installation service, and when the charges thereof are composite. Therefore, it would be incorrect to interpret that after addition of the expression, structure-pre-fabricated or otherwise to the existing list of objects of levy of plant, machinery or equipment, it brought significant change in the said entry so as to result an interpretation that activity of erection of structure standing alone, would be leviable to service tax. On the contrary, the purpos....
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....different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. 43. In Paper Products Ltd. Vs. Commissioner of Central Excise, 1999 (112) ELT 765(SC) Their Lordships observed as: 5. It is clear from the above said pronouncements of this Court that, apart from the fact that the Circulars issued by the Board are binding on the Department, the Department is precluded from challenging the correctness of the said Circulars even on the ground of the same being inconsistent with the statutory provision. The ratio of the judgment of this Court further precludes the right of the Department to file an appeal against the correctness of the binding nature of the Circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time. 44. Hence, the circulars issued by the Board explaining/clarifying the meaning of Erection, Commissioning or Installation Service , cannot be ignored, while interpreting the same and applying it to the facts and circumstances of the present case. 45. The other plea of the Appell....
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.... Scientific and Technical Terms Installation Procedures for setting up equipment for use or service. Black's Law Dictionary Erect - 1. To construct. 2. To establish. A framework or construction with elements Identifiable, giving stability, form & able to resist strain & stress; that which is built or constructed, an edifice or building of any kind. Oxford Dictionalry n. manner in which a building or organism or other complete whose is constructed, supporting from work or whole of the essential part of something, make, construction Chamber s Dictionary n. manner of building; construction; a building in a substance; manner of organization; an organic form. Strouds Judicial Dictionary 1. In its ordinary sense, means something which is constructed in the way of being built up as is a cuilding (SouthWales Alluminium Co. V. Neath Assessment Committee) 2. An advertising sign of a sheet metal nailed to the outside of a frame which is put on a wall does not constitute a wooden or other structure or erection , within s. 18(1) at the Manchaster Corporation Act, 1891 (54 & 55 Vict., C.CCVII) (Borough Billposting Co. V Manchester Corporation, [1948] 1 ....
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....e pre-fabricated or otherwise would refer to both civil as well as mechanical structures. It cannot be denied that Commissioning or Installation Service was earlier in relation to plant, machinery, equipment etc., and to avoid confusion, in a composite contract involving civil work, the word, erection , has been added and to bring more clarity, the word, structure pre-fabricated or otherwise , has been added subsequently. If it is read in the context of plant, machinery, equipment, the expression Structure pre-fabricated or otherwise , in most of the cases, would refer to mechanical structure whether fabricated at site, or brought in pre-fabricated condition for erection, commissioning or installation, but it would also include civil structures necessary for erection, commissioning or Installation of plant, machinery, or equipment . Thus, fence, even though a structure, cannot be read in isolation but has to be read along with erection, commissioning or installation and also with the objects of service tax levy i.e. Plant, machinery or equipment. 49. The Ld. CA appearing for the Appellant M/s R.K.Grover & Co. (Appeal No. ST/A/70961/2013-DB during the course of hearing submitted ....