TaxTMI 
TaxTMI 
2019 (7) TMI 330
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....formers. The Appellant supplied the transformer on payment of duty and thereafter erected and commissioned the transformer and charged service tax on such services under Works Contract Services under Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. They were issued show cause notice alleging that the supply and erection and commissioning cannot be vivisected. That the Appellant is not eligible to avail the cenvat credit on inputs used in manufacturing of transformers as they have discharged the service tax liability under the Works Contract Composition Scheme thereby making them ineligible from availing cenvat. Accordingly it was proposed to demand duty equal to cenvat credit availed by the Appellants on inputs consumed in the manufacture of transformer as well to impose penalty and recover interest. It was also proposed to demand service tax by including the value of transformer in value of services and accordingly service tax demand of differential service tax was made along with interest and proposed to impose penalty. The adjudicating authority vide impugned order held that M/s Sunil Hitech Engineers were given contract by Maharashtra State Electricit....
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....t full rate i.e. 12.36% is worked out and the credit of duty paid on transformers and service tax paid by them is adjusted against such liability, it would be clear that the Appellant has paid excess service tax than required and hence the demands are not sustainable. He submits that they were of bonafide belief about tax on supply and services separately being two independent contracts and hence there is no reason to impose penalty upon them. 3. Shri Sameer Chitkara Ld. AR appearing for the revenue submits that since the supply and erection of transformers is a composite activity, hence the impugned order has rightly confirmed the demands. He supports the findings of the impugned order. 4. Heard both the sides and perused the records. We find that the Appellant has supplied the transformer under separate contract on payment of central excise duty and the erection, commissioning of transformer was under separate contract. When the value of both the activity is separately shown, both the activities cannot be clubbed to make it taxable under the Works contract composition scheme. The revenue has nowhere disputed the payment of central excise duty on transformer and therefore on....
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....earned advocates Shri V.K. Jain and Ms. Dimple Gohil appeared on behalf of the appellant and argued that both the contracts were executed on 24-8-2007. Learned Shri Jain (advocate) made us go through the supply contract dated 24-8-2007. He contended that as per the definition of agreement clause of Supply Contract, the balance of plant constitutes all such machinery, permanent plant and equipment, materials, etc. other than the imported plant and equipment separately provided by the recipient of services. The balance of plant was required to be supplied by the appellant under the supply contract. On the other hand, appellant was required to provide services of erection, installation and commissioning of the facility under the construction contract, in which all the imported material supplied by the service recipient along with the indigenous material was required to be used for making the facility functional. He emphasized that the balance of plant procured by the appellants from different vendors was supplied to service recipient and as per the clause 15 of the Supply Contract the title and risk for the balance of plant in each item is transferred to the owner/recipient of the ser....
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....he Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was introduced with effect from 7-7-2009 under Notification No. 23/2009-S.T., dated 7-7-2009. It was, therefore argued by him that both the contracts have been executed before 7-7-2009 and the said amendment will not be applicable to their case. It was also emphasized that there is no evidence on record to show that supply contract/construction contract were entered after 7-7-2009 and were artificially bifurcated on an earlier date to claim lesser value for the purpose of Service Tax payment. 5. Shri K. Sivakumar, learned AR appearing on behalf of the Revenue argued that both the contracts are dated 24-8-2007 and have been made operational simultaneously in order to make facility for the service recipient. He thus argued that both these contracts have to be read as one in view of the judgment dated 28-2-2010 given by ITAT in the case of appellant itself wherein it was held that such contracts are required to be considered as one composite contract only. 6. We have given our anxious thoughts to the arguments made by both sides and also perused the records. The issue required to be decided....
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....or damage in the balance of plant. As per the definition of the supply contract, balance of plant includes all such machinery permanent plant, equipment, material, etc. required for commissioning and maintenance of the balance of plant. On the other hand, 'defects liability' mentioned under clause 34 of the Construction Contract talks of the remedy of defects/damages in the 'facility' or to any unit thereof. The word 'facility' is defined under the Construction Contract to mean a Thermal Power Project in relation to which the works are required to be carried out in accordance with the contract. The word 'defect' as per the definition clause means any defect, imperfection, deficiency or other fault in the facility or part thereof arising from or in relation to the execution of work. 8. From the above clauses of the contracts, it is clear that there are separate defects liability clause under the contracts separately provided for the defects in balance of plant and the defects that can creep in the working of the facility by the service provider for the service recipient. Therefore, it is not correct to hold that defects liability clause of the construction contract also mak....
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....nce of Plant equipment, the ownership/title lies with the service recipient when the same are received at site. Accordingly, it has to be held that after receipt of balance equipment, the title/ownership of the same is transferred to the service recipient. Accordingly, adjudicating authority cannot go beyond the C.B.E. & C. Circular No. 150/1/2012-S.T., dated 8-2-2012 wherein it has been clarified that for the works contract executed before 7-7-2009, free of cost supplies are not required to be added to the gross amount, for the purpose of payment of Service Tax. There is no evidence on record to convey that both, the supply contract and the construction contract were artificially bifurcated after introduction of explanation to Rule 3(1) of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. 10. The Hon'ble Supreme Court in the case of UOI v. Mahindra and Mahindra Limited [1995 (76) E.L.T. 481 (S.C.)] in Para 5 has held as follows :- "5. The main thrust of the arguments of the learned Solicitor General before us was that the price for the sale of CKD packs by the foreign collaborator to the respondents is not the true price. In other words,....