TaxTMI 
TaxTMI 
2017 (7) TMI 687
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....alled penstocks/steel liners/pressure shaft liners which are integral part of tunnels and irrigation schemes. 2.2 During the relevant period concerning these appeals, the assessee entered into three sub contracts with main contractors who had secured contracts either singly or jointly with assessee by bidding for projects relating to various works in different States. 2.3 Under the respective contracts, the appellant was required to perform and undertake "works" of designing, supplying, fabrication, inspection, testing, installation and commissioning of pressure shaft liners otherwise called 'steel liners/penstocks' forming part of the respective projects contracted upon by the main contractors. 2.4 Service Tax Department issued periodical demand notices under section 73, alleging that the Appellant was required to discharge service tax liability from January 2005 to March 2010 under the category of "Erection, Commissioning or Installation service" as defined in Section 65(105) and from April 2010 to March 2012 (covered by 2 show cause notices) under the category of "works contract service" as defined in section 65(105 (zzzza) of the Act. 3. In adjudication, the concerned autho....
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....ertaken by them at various stages of completion, submitted alongwith appeal papers, to highlight that the fabrication has been done at site and that such work relates only to tunnel for transportation of water. He made oral submissions, which can be summarised as under: (a) Composite works contracts such as those in the present case could not have been brought within the purview of the service tax net till 01.06.2007 under any head/category but as works contract. This is fortified by the new entry introduced by amendment of law prospectively from 01.06.2007 to cover such works contracts under the said section as held by the Supreme Court in the case of CCE v. Larsen & Toubro Limited, [2015(39)STR 913 (SC)]. (b) Even after introduction of works contract service from 1.6.2007, the categorical exclusion of works done/services provided in respect of tunnels and dams amply demonstrate and fortify that the contention of the Appellant that activities of the Appellant were not taxable in law subsequently also under the category of 'works contract'. (c) For the period prior to 1.6.2007, department has alleged that the activities comes under the ambit of Erection, Commissioning or Instal....
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....of penalties does not arise. 3.4 In respect of appeal ST/962/2009 filed by department, Ld. Advocate submits that in view of their contentions that there can be no taxability on their activities, the ground of appeal therein that adjudicating authority has wrongly taken lower taxable value which will be of no consequence. 3.5 In respect of appeal No.412/2007, also filed by PES Engineers, Ld. Advocate states that the issue therein concerns rejection of refund claim on the ground that same was not admissible and that assessee had rightly discharged service tax liability on the very same taxable services rendered which are in dispute in the earlier appeals. Ld. Advocate contends that in view of their primary contention that the activities carried out by them cannot attract service tax, the tax wrongly discharged by them is very much liable for being refunded. 4. On the other hand, on behalf of the department, Ld. DR, Shri J.V.S. Chakrapani, opposes the appeals filed by the assessee. The submissions made by him can be summarised as follows: 4.1 The work of fabrication, installation and commissioning of Penstocks/ Steel Liners and Pressure Shaft Liners in the Hydro-electric project ....
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....ion agency, in relation to,- i) Erection, commissioning or installation of plant, machinery or equipment; or ii) Installation of- iii) a) electrical and electronic devices, including wiring or fittings therefor; or b) plumbing, drain laying or other installations for transport of fluids; or c) heating, ventilation or air conditioning including related pipe work, duct work and sheet metal work; or d) thermal insulation, sound insulation, fire proofing or water proofing; or e) lift and escalator, fire escape staircases or travelators; or f) such other similar services. WCS: Explanation: for the purpose 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, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sh....
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....Steel Liner (Pressure Shaft liner/ Penstock) is a part and parcel of construction of tunnels that are used as water conductor in hydroelectric projects. IS 4410 (Part 10)-1988 defines the term in relation to Hydroelectric power stations. Section 4.16 of this code defines 'tunnel' as an underground passage constructed for conveyance of water, equipment, materials and movement of traffic. Sub-section 4.16.5 defines 'tunnel lining' as a protective treatment in the form of plain or reinforced concrete, steel etc. given to reduce frictional resistance to prevent the loss of water to the surrounding rock and to provide support to the excavated rocks in poor reaches. Therefore, steel liners are not plant, machinery, equipment or installation independent of the tunnel. The tunnel would not be complete without the liner. 5.7 Discernibly, steel liners fabricated by the appellants is meant to reinforce and complete the excavated tunnel area. Tunnel becomes complete for the purposes it has to serve, only after the steel liners are put in place and, as submitted by the appellants, the gap between liner and the rock filled with concrete, cement grout and sealed with steel plugs. While the fabri....
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....ered as Erection, Commissioning or Installation of Plant. Following excerpts from the said impugned order makes for interesting reading: "Thus, it can be seen that the penstocks may be considered as a components of Power Plant Civil Works. I find that the Central Water Commission has clearly classified the work of penstock/steel lining work as civil construction work. It is not necessary that they have to make tunnel or do masonry work to qualify it as a construction work.................... No doubt, the steel liner is fabricated at the site as per the terms of the contract only but the process of installation of steel liners on to the pre-excavated tunnels in the rock formation in the above mentioned manner cannot be considered as erection, commissioning or installation of plant. The aforesaid steel liners, by themselves, cannot be considered as 'plant', or 'machinery' or 'equipment' or 'structure'. It is only after the above steel liners are provided to the pre-excavated tunnels in the desired manner so as to make it penstock that the said monolithic structure becomes part and parcel of Power Plant Civil Works." 5.11. It is a tested canon of taxation that introduction of a ne....