AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2009 (2) TMI 142
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.... the appellant is engaged in providing the service falling under the category of 'Commercial & Industrial Construction Services' (CICS) but has not obtained Service Tax Registration under the category of CICS from the jurisdictional Central Excise authorities and is not discharging Service Tax liability on the gross amount charged to clients. 2.2 On further investigation, it appeared that appellant has entered into an agreement dated 3-2-2005 with NTPC for executing the work of construction of "Raw water reservoir and its lining package" at Super Thermal Power Project, Stage-I (3 X 660 MW) at Sipat, Bilaspur District (C.G). Accordingly, the work of construction of "Raw water reservoir and its lining package" was carried out by the appellant at the aforementioned premises. It was further revealed that for the construction of said reservoir, the construction materials such as cement, steel and M.S. Pipes have been supplied/provided by NTPC free of cost to the appellant and the remaining materials such as sand, aggregates, bricks, earth, HDPE pipes, geo textile and machineries, equipments, tools, spares etc., have been procured/purchased by the appellant and used in the said construc....
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....2-2006. 2.7 Appellants contested the show-cause notices and denied the allegations. It was mainly contended, that what was constructed was a dam and not a reservoir, that a natural reservoir can come into existence only if the flow of water is stopped. The Adjudicating Authority took up both the show-cause notices for disposal and after considering the oral and written submissions came to conclusion that activities undertaken by the appellant pertains to construction of 'Raw water reservoir' and not a dam and hence, the appellant was liable to pay service tax. Coming to such a conclusion the Adjudicating Authority ordered as under: "ORDER In respect of show-cause notice No. DGCEI/MZU/I & IS 'D'/30-108/06/15358, dated 14-12-2006,- 1. I demand an amount of Rs. 4,13,63,7 17 towards Service Tax and an amount of Rs. 8,27,273 towards Education Cess, totalling to Rs. 4,21,90,991 (Rupees Four Crores Twenty One Lakh Ninety Thousand Nine Hundred and Ninety One Only) for the period from February, 2005 to November, 2006, under the proviso to sub-section (1) of section 73 of the Finance Act, 1994, from M/s. Soma Enterprise Ltd., Hyderabad, as. 2. I demand interest on the Service Tax demand....
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....rthen dyke was used by NTPC for generation of electricity in the Thermal plant and the said electricity was sold by them. He would urge that because NTPC is selling electricity, the activity as undertaken by the appellant would not be a 'Commercial and Industrial Construction Services'. It is his submission that it is not necessary that dam is to be constructed to stop the progress of flowing water but it can also be constructed to stop the natural flow of water, if stored. 3.1 Learned consultant would alternatively submit .that the entire contract with NTPC is a 'works contract'. He would urge us to go through Para 5 of the contract entered with NTPC and submit that pursuant to this clause, appellant took registration under sales tax with Government of Chhattisgarh State and discharged sales tax liability. He would submit that the service tax levy on works contract came into effect from 1-6-2007 and hence, prior to that date service tax liability does not arise. He would submit that period involved in this case is prior to 1-6-2007 and would also submit that what is works contract is defined in the Finance Act, 1994. He would rely on the decisions of the Tribunal in the case of: ....
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....evies, entry tax, service tax, Cess/Royalty/Seinorage charges etc., on all services, materials and articles that you may use for this work. Any increase in the aforesaid taxes, import duties, toll, octroi duties, excise duty, levies, entry tax, service tax, Cess/Royalty/Seinorage charges etc., that may arise during the currency of the contract shall also be to your account and shall not be paid/reimbursed to you by NTPC. 7. Income-tax 7.1 We shall be entitled to deduct income-tax at source from all payments due to you under this contract, in accordance with the Income-tax Act, 1961 and rules made thereunder including any amendments for modifications thereof." It can be noticed from the above reproduced clauses of the contract that the entire contract was envisaged by both the parties as 'works contract'. It is also undisputed that in pursuance to the above reproduced clauses, appellant got himself registered with the Sales Tax authorities in Chhattisgarh State. If a contract is understood and acted upon by both the parties as a 'works contract' then it would be futile exercise to understand it otherwise and try to tax the same under Service Tax. It is undisputed that relevant pe....
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....ion and the one between the assessee and the banks concerned. Again, the above decision of the Apex Court is not an authority on the proposition that service tax could be levied in respect of indivisible works contracts on the strength of a Notification issued under section 93 of the Finance Act, 1994 in the absence of charging provision in the said Act. It is true that, with the insertion of clause (29A) in article 366 of the Constitution, sales tax could be levied in respect of indivisible works contracts. But, for the levy of service tax in respect of such contracts prior to 1-6-2007, no statutory authority has been cited by SDR". (p. 357) 5.1 Further this Bench in the case of Air Liquide Engg. India (P.) Ltd. (supra) at paragraph 6.2 held as under: "6.2 Further, on going through the eight contracts which are under consideration, we find that they are actually works contract on turnkey basis. On this point there is absolutely no doubt. These works contract came into the service tax net only with effect from 2007. In such circumstances, for a period to 2007 works contract cannot be recovered under Consulting Engineering Services'. This view has been taken by the Tribunal in the....