TaxTMI 
TaxTMI 
2026 (8) TMI 925
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....educting 60% abatement from the taxable value received during the period from April 2011 to March 2016. Department formed an opinion that as no transfer of property in goods was involved in the execution of the contract nor were included in the taxable value. The abatement of 60% which is available to Works Contract Service has wrongly been availed. Department also observed that even while deducting the said abatement the value of goods supplied free of cost by the service receiver has not been included. The same has resulted in short payment of service tax amounting to Rs.32,55,453/-. The appellant is alleged to have willfully suppressed the material facts from the department with an intent to evade the payment of service tax. 1.2 A Show Cause notice No. 61/2016 dated 05.12.2026 was served upon the appellant proposing service tax amounting to Rs.32,55,453/- to be recovered along with the interest at the appropriate rates and the proportionate penalties. The original adjudicating authority vide Order-in-Original No. 08/2017 dated 04.12.2017 had dropped the proceedings initiated against the appellant. The said order was got reviewed by the departmental committee, vide Order-in-Re....
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....n terms of CBIC Circular No. 150/1/2012-ST dated 08.02.2012. The activity of erection, commissioning and installation of plant and machinery for PGCIL was rightly held to be exempted upto 21.06.2010 in terms of Notification No. 45/2010-ST dated 20.07.2010. The review order as well as the order of Commissioner (Appeals) has wrongly denied the activity of appellant to be Works Contract Service. The payment of VAT has also not been considered while arriving at the said conclusion. The second contract is held to be a service contract of service simplicitor under the category of Erection, Commissioning and Installation Services. 3.2 Learned counsel further impressed upon that present dispute pertains only to the second contract. It is submitted that from the second contract also, it is quite clear that apart from rendering services material/equipment were also sold by the appellant as the part of the contract. As and when the appellant supplied the material under supply contract agreement, the ownership of material used to get transferred to PGCIL. Hence, the activity of Works Contract Service is eligible for the abatement in terms of aforementioned composition scheme. CBIC Circular ....
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....of these submissions, the order under challenge is prayed to be set aside and the appeal prayed to be allowed. 4. While rebutting these submissions, learned Departmental Representative at the outset has reiterated the findings arrived at in the impugned order in appeal. 4.1 Learned Departmental Representative has further submitted that the appellant had already segregated the work order into two portions i.e. one for the supply of goods and another for the provisions for service portion. Therefore, the appellant was not entitled for any abatement as per Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2002 and was required to pay service tax on full value of the second contract as per provisions of Section 24 of the Service Tax (Determination of the Values) Rules, 2006. 4.2 Learned Departmental Representative further submitted that there were two methods provided for discharging of service tax liability arising from works contract service up to 30.06.2012, one is provided under Rule 2A in the Service Tax (Determination of Value) Rules,2006 and the other was provided under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, w....
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....ors; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects; 5.3 With effect from 01.07.2012 (post Negative list concept) work contract gets defined under sub clause (54) of clause Section 65B of the Finance Act, 1994 to mean a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property. 5.4 It can be seen from the above reproduced definition of works contract th....
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....f goods simpliciter and another being for service simpliciter, it get clear that under the said clause appellant had to supply only necessary fixing material while performing the activity of erection, commissioning and installation of such plant/machinery/equipment that also has nowhere been specified by the appellant. On the contrary it is the admitted fact that for ECIS, PGCIL has provided material free of cost. Therefore, the activity carried out by the appellant with reference to second contract, is a service simpliciter contract under erection, commissioning/installation services. The first contract for supply of goods and material is a separate contract which has no bearing on this second contract. 5.7 From the above definition of Works Contract Service transfer of property in goods while providing service is the characteristic of one composite contract to be called as Works Contract Service. The goods supplied free of cost by the service recipient cannot be called as transfer of property in goods, the way it is required under Section 65(105)(zzzza) of the Finance Act. Otherwise also value of such goods is not includable as was held by the decision of Larger bench of this ....