2019 (2) TMI 880

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....r, the appellants have not acquired any Service Tax registration. Consequently, an offence case was booked and a notice demanding Service Tax for the period 16/06/2005 to 30/09/2006 was issued to the appellant. 2. Ld. Counsel for the appellant pointed out that they were engaged in provision of Thermal Insulation, Sound Insulation, Water Proofing, by using their labour and materials. He argued that since they were consuming material while provision of the service that amounted to works contract and the activity of works contract was not taxable during the period 16/06/2005 to 31/12/2006 has held by Hon'ble Apex Court in the case of Larsen & Toubro 2015 (39) STR (913). It was argued that the appellant had an understanding that since they w....

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....prove that there was transfer of property which was leviable to tax as sale of goods as envisaged in the definition of Works Contract. In this regard Ld. Counsel has contended that since the contract itself was produced which showed that the value for the service are included the value of the material consumed. It automatically meant that the contract were in the nature of Works Contract. 4.2 In this regard, it is pertinent to note that not all contracts which involve any transfer of property become Works Contract. In this regard, the observation of Hon'ble Apex Court in Para 42 & 43 of the decision in the case of Bharat Sanchar Nigam Ltd. vs. Union Of India 2006 (3) TMI (1) SC are relevant. Para 42 & 43 reads as follows: "42. Of all ....

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....29-A), unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service, and impose tax on the sale. The test therefore for composite contracts other than those mentioned in Article 366 (29A) continues to be-did the parties have in mind or intend separate rights arising out of the sale of goods. If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or the other is to as what is the substance of the contract. We will for the want of a better phrase, call this the dominant nature test. I....