AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 8
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....d on the following grounds: A. Demand of service tax on work contracts executed prior to 01.06.2007 is not sustainable keeping in view the judgment of Hon'ble Supreme Court in the case of Larsen & Toubro Ltd [201 (39) STR 913 (SC)], as also, various judgments of this Bench as well as Coordinate Benches, as under: i. Swarnandhra IJMII Integrated Township Development Company Pvt Ltd Vs CCE, Hyderabad-IV [2022 (64) GSTL 556 (Tri-Hyd)] ii. Navayuga Engineering Co. Vs CCE, Visakhapatnam [2017 (51) STR 285 (Tri-Hyd)] iii. PES Engineers Pvt Ltd Vs CCE, Hyderabad [2017 (7) GSTL 57 (Tri- Hyd)] B. WCS provided by them in relation to bridges and dam are outside the purview of service tax as per the definition of the term 'works contract' itself and hence, all the constructions in respect of dam in a hydroelectric projects and canals in power project are in relation to main activity of construction of canal/dam. He is relying on the following judgments: i. PES Engineers Pvt Ltd Vs CCE, Hyderabad (supra) ii. Continental Constructions Ltd Vs CCE, New Delhi [2018 (12) GSTL 109 (Tri-Del)] iii. MCM Services Pvt Ltd Vs CST, Delh....
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....VRCL Assets & Holdings Ltd Vs CC, CE & ST, Hyderabad [2021 (2) TMI 790 - CESTAT Hyderabad] 4. Learned AR has reiterated the findings of the adjudicating authority. 5. Heard both sides and perused the records. 6. We find that the adjudicating authority has decided the SCN where he has held that service tax is payable even for the period prior to the introduction of WCS under the category of CICS as it involved transfer of property. He has also held that contract is composite contract and the essential characteristic of this contract is flowing from CICS/WCS and they are commercial in nature. It was also held that the exclusion of road is only a part of integrated work entrusted to assessee and therefore, cannot be identified as a separate entity. He also held that both contractor as well as sub-contractor are leviable to service tax separately and also upheld the invocation of extended period. We note that the entire SCN is based on audit report dt.12.10.2010 of Accountant General (C&RA) Audit, Andhra Pradesh and the appellant's statement dt.15.09.2011. We find that the SCN has, inter alia, noted certain factual matrix like appellants having entered into agreement with M/s ....
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....iable to service tax. We find that the SCN has not given details as to the exact nature of the activity being undertaken by the appellants and a generic description has been given about the entire scope of work covered by the agreement between the appellant and their clients. We, however, find that in respect of works executed for M/s Meenakshi Power Ltd, the adjudicating authority held that the contract was for civil work of construction of Middle Kolab Small Hydroelectric Scheme and therefore, it was essential for construction of civil structure. He has not examined the scope of work so as to decide whether they are eligible under specific exclusion from the definition of WCS or in terms of any other exemption. A contract may be for execution of work, which has specified scope of work for different activities and each of these activities, if they involve material portion also, would be covered within the scope of WCS and the definition of WCS itself excludes construction of dams, canals, roads, etc., from its purview. Therefore, if there is a verifiable component indicating that they were engaged in providing services in relation to construction of dam, canal, road, etc., then th....
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....TR 830 (Tri-Ahmd)], wherein, the issue was whether road being part of a composite contract gets excluded from the purview of CICS/WCS or otherwise and it was noted by the Tribunal that in view of Board Circular dt.27.07.2005 the admitted fact was that the contract was purely for construction of road and therefore, it was held that it will be eligible for exemption. In the present appeal, the contract is for construction of road between M/s BRPL staff quarters and BRPL refinery, however, it is not clear whether it is for exclusive use of BRPL employees or public at large. If the road is shown in the contract for construction of any complex, then it would be considered as very much part of the construction as a part of complex, itself as an integrated development of the complex and therefore, not eligible for exclusion. This aspect can be examined only after going through the detailed contract, maps, etc. 10. Insofar as the issue of sub-contractor or contractor being liable to service tax or otherwise being exempted, we find that there are no details available whether they were paying service tax or were otherwise exempted. Moreover, even if they were exempted from service tax or ....
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....ere is no scope for invoking extended period or for imposition of penalty under section 78. 13. In view of the above discussions, it is held as under: a) Demand for the period prior to 01.06.2007 is set aside. b) Demand in respect of construction of power canal, intake pool, intake structure, power house, outdoor switchyard, road works, etc., will have to be decided in terms of contracts entered between the appellant and the various companies to establish that these works were either related to construction of dam or canal or otherwise and demand has to be re-determined accordingly. c) Construction of BT road from BRPL Staff Quarters to BRPL refinery would have to be decided in terms of nature of contract in view of the observations made by us, supra. d) Laying of RCC M30 at raw water reservoir will not be considered as sale of RCC Mix in the given factual matrix and will be a service. e) Invocation of extended period will not sustain in view of the factual matrix and submissions as well as case laws cited by the appellant. Similarly, the penalty under section 78 of the Finance Act, 1994 will also not sustain. 14. We, therefore, fi....