TaxTMI 
TaxTMI 
2019 (3) TMI 978
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....t they had discharged service tax liability by availing benefit of Notification No.1/2006-ST dt. 1.3.2006 namely, after availing 67% abatement on the value of taxable services under the category of Erection, Installation or Commissioning services. It was noted by department that the machinery and equipment were supplied by service recipient. From perusal of purchase orders and agreements between the appellants and the service recipient Nortel Networks (India) Pvt. Ltd. (hereinafter referred to as Nortel), it appeared that in all invoices issued to customer, it has been declared by appellants as "service charge" only. The department was of the view that to avail the benefit of notification, the plant, machinery, equipment and other material ....
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.... upheld the orders of original authority. Hence Appeal Nos.ST/738 to 740/2010. So also, SCN as at Sl.No.4 was adjudicated which culminated in order dt. 29.04.2011 (impugned order) passed by Commissioner (Appeals). Hence Appeal ST/463/2011. 3. Today when the matter came up for hearing, on behalf of the appellants, Ms. P. Jayalakshmi made oral and written submissions which can be broadly summarized as under : (i) The issue involved in the instant appeals is no more res-integra and is covered by the decision of the Hon'ble Supreme Court in the case of Commissioner Vs. Larsen & Toubro Ltd. 2015 (39) S.T.R. 913 (SC), where in it was held that works contract is not taxable prior to 01.06.2007. This decision has been followed by the order of....
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....nufactured materials certain materials on their own and provide the said materials to the contractor for the purpose of execution of the contract and the contractor is a bailee in respect of such materials. (iv) The appellants submits that the explanation to the said Notification cannot result in a taxation of an item which is not contemplated in charging section and is beyond even the legislative competence of the Parliament. If materials supplied to the service provider has to be added to the contract value and then 67% abatement is to be calculated, it would amount to a service tax levy on 33% of the value of the materials supplied by the client, which is not within the scope of the contract of the contractor and would amount to levy ....
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....ormance of service and completion of the work. 4.3 Apart from that it has been provided in agreement that "all materials including without limitation equipment, documentation, software, tools etc. supplied by Nortel Networks or the Customer remains the property of Nortel Networks or the customer at all times. 4.4 Further, in all invoices issued to Nortel, it has been declared by the appellant that "service charges only" and also declared that "materials supplied by the party". 4.5 Appellants in their letter dt. 21.09.2007 regarding scope of work, they themselves admitted that "major equipment" would be supplied by customer Nortel; that their scope of work would only be erection, installation and commissioning of towers including fo....
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....nce and support obligations. Contractor will bear all costs associated with its performance hereunder. In no circumstance, will Nortel Networks be liable for such expenses or costs. 5.3 Further perusal of the purchase order and invoices indicates that the appellant's activities are not restricted only as a service provider simplicitor, for example a purchase order / invoice clearly indicate "supply and installation of power cables multi strand, Armoured copper UG, Tower implementation, shelter erection on site, supply and installation of earthing pits, supply and installation of aviation lamp for towers and so on. The SCN has also alluded to the appellant's letter dt. 21.09.2007 wherein the appellants have reported to have informed that ....
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....o be convincing. 5.6 However, necessary facts as to whether the appellants had actually supplied material also for the works executed by them is not forthcoming. More so because, the purchase order says "for services only". It is seen that appellants have rendered ECIS in nature of laying foundation for tower, installation of machinery equipments etc. Though tower, machinery, equipments are provided by Nortel, the contractor would have to use other materials for rendering ECIS. The facts in such line have to be verified. In such circumstances, we are of the considered opinion that the matter requires to be remanded to the adjudicating authority to relook into the question as to whether the works executed are service simplicitor or compos....