TaxTMI 
TaxTMI 
2019 (7) TMI 503
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....These Customers place orders on contract basis for supply and erection separately. The contracts are on open tender system obtained through International Competitive Bidding and Domestic Comparative Bidding. The Appellant is collecting erection and commissioning charges which were shown under job work receipts and the same are chargeable to service tax w.e.f. 1.7.2003. Consequently, a service tax demand of Rs. 15,35,83,991/- for the period 1.4.1999 to 9.9.2004 under Section 73 (a) of the Finance Act, 1994 was proposed on the ground that the services provided by the Appellant to their customers should be considered as taxable under the category of " Consulting Engineer" and the fees / charges for erection, testing and commissioning are to be considered as taxable value. Though the adjudicating authority vide impugned order dated 20.9.2010 held that for the period 1999 to 30.6.2003, the demand under heading " Consulting Engineer" is not sustainable, however held that the demand of Rs. 8,78,84,996/- of service tax is payable by the Appellant as they have rendered the services of installation of equipment during the period from 1.7.2003 to 9.9.2004, which attracts service tax as per th....
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....o relies upon the Tribunal judgment in case of Aakriti Construction - 2017 (7) GSTL -478 (Tri.). He further submits that the Revenue authorities have accepted the classification under the category of construction service and w.e.f. 1.6.07 as Works Contract service for the same activities for subsequent period. Therefore, the demand under the impugned category is not correct. He also submits that the demands are beyond the scope of show cause notice as the demand was proposed under the category of "Consulting Engineer" whereas the same has been confirmed under "erection & commissioning Services" and hence not sustainable. He relies upon the judgments in case of Ballarpur Industries - 2007 (215) ELT 489 (SC) and Gas Authority of India Ltd - 2008 (232) ELT 7 (SC). 4. Shri Sameer Chitkara, Ld. Additional Commissioner (AR) appearing for the Revenue supports the impugned order and submits that the services are covered under the heading of erection service and hence are liable to service tax and the appellant is also liable for penalty. 5. Heard both the sides and perused the facts of the impugned case. The impugned demands covers the period 1.7.2003 to 9.9.2004. The Appellants during t....
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....e then there is no tax in law. Then it is for the legislature to do the needful in the matter. This construction, in our considered view, amounts to supplementing the charging section by including something which the provision does not state. The construction placed on the said provision does not flow from the plain language of the provision. The proviso requires the exempted property to be subjected to tax and for the purpose of valuing that property alone the value of the other properties is to be taken into consideration. But, if in doing so, the said property becomes taxable, the Act does not provide at what rate it would be taxable. One cannot determine the rateable value of the small property by aggregating and adding the value of other properties, and arrive at a figure which is more than possibly the value of the property itself. Moreover, what rate of tax is to be applied to such a property is also not indicated." (at paras 12 and 16) 22. Equally, this Court in Govind Saran Ganga Saran v. CST, 1985 Supp SCC 205, held :- "The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescrib....
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....quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each head of income. No doubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computation provision at all if a certain interpretation is pressed on the charging provision. That pertains to the fundamental integrality of the statutory scheme provided for each head." (at para 10) 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element i....
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....003. The business of the assessee is sale of electricity which is wholly regulated by provisions of the Electricity Act. In pursuant of its business, the assessee has to develop and maintain an efficient, coordinated and economical distribution network within its area of supply. To supply electricity to its consumers a network is first created. The assessee established a distribution network for providing connections to consumers within its jurisdiction. The network involves installation, erection, commissioning of transmission towers and connectors for transmitting energy to various consumers for supply of HT & LT electricity and installation of meters to measure consumption of monthly energy. The assessee recovers the charges for these services periodically, an area which is also regulated by law. Revenue initiated proceedings against the assessee for recovery of Service Tax under the taxable head "Erection, Commissioning & Installation Service", defined in Section 65(39a) read with Section 65(105)(zzb) of the Act. The assessee claimed immunity to tax on the basis of Notification No. 45/2010-S.T., dated 20-7-2010. This notification issued in the exercise of the power conferred by....
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.... to the distribution of electrical energy by a distribution agency is exempt from levy of Service Tax. 4. The analysis of the Adjudication Authority in relation to the assessee's claim for immunity to Service Tax is predicated on the Notification dated 20-7-2010 vide paragraph 5.1 of the order-in-original under title "Discussion and Findings". The Adjudicating Authority held that the notifications do not exempt the activity/service of installation of various equipments at the consumers premises, as this service is different from and in addition to service of distribution of electricity; that equipment installed by the assessee is not in lieu of hire charges; that the infrastructure (established by the assessee) is used to supply electricity to various consumers and the consumers do not have ownership of the transformers. The contention by the assessee that installation of the various equipment, establishing the network is an essential component of his business of distribution of electricity which is carried out in terms of the provisions of the Electricity Act, 2003 was rejected on the ground that all duties required to be delivered by a distribution licensee under provisions of ....
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.... dated 16.7.2018, CESTAT, Mumbai We also find that during the impugned period, the activity of only commissioning and installation was taxable and only from 10.9.2004, the services of erection were included /adduced to commissioning and installation service so as to make the same taxable. The same is explicit from the CBEC Circular No. 59/8/2003-ST dated 20.6.2003 wherein the Board has viewed as under :- "Commissioning and Installation Services : In case of commissioning and installation, it h commissioning and installation as been pointed out that in case of turnkey project, the contract may be indivisible and no separate value could be assigned to commissioning and installation of goods. Doubts have also been raised as to what would be the value of taxable service. It is submitted that it has been provided in law that service tax is leviable on erection and commissioning charges only and not on the material and goods supplied. However, it is upto the service provider to show the break-up of commissioning and installation charges. In case service provider shows consolidated charges, service tax would be leviable on such consolidated amount. A doubt has been raised as to whe....
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....h disputes have arisen : Based on the foregoing, the following would be the tax status of some of the activities in respect which disputes have arisen : S.No. Activity Status 1 Shifting of overhead cables / wires for any reasons such as widenikng / renovating of roads Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 2 Laying of cables under or along wide roads Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 3 Laying of electric cables between grids / sub-stations /transformer stations en route Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 4 Installation of transformer / sub-stations undertaken independently Taxable service, namely erection, commissioning or installation services (section 65 (105) (zzd) 5 Laying of electric cables upto distribution point of residential or commercial localities / complexes Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 The Tribunal in case of Aakriti Construction - 2017 (7) GSTL-478 (Tri) in para 6 of the impu....