A works contract can be vivisected prior to 01/06/2007 and be subjected to levy of service tax under “erection, installation and commissioning service”. Also, longer period of limitation invokable.
FACTS:
The Appellant had entered into six lumpsum turnkey contracts prior to 01/06/2007 each having three parts and a consideration for each of the parts viz. designing, procurement of various capital goods and thereafter installation of such goods was ascertainable. They were discharging service tax in respect of designing under "consulting engineer service". No service tax was discharged in respect of the third part considering it to be an indivisible works contract comprising of both goods and services on the basis of the decision of the Tribunal in the case of Daelim Industrial Co. Ltd vs. CCE, Vadodara [2006(3) STR 124(T)). Member (Judicial) and member (technical) had divergent views both in respect of taxability as well as invocation of extended period and therefore the matter was placed before the third member.
HELD:
The third member distinguished the decision in the case of Oaelim Industrial Co. Ltd
(supra) by
stating
that
the
said decision
has
not
taken
into
account
the
46th
constitutional amendment
which
inserted
clause
(29A)
in
Article
366
of the
constitution
mandating
that
the
indivisible
contracts could
be
split
up
and
a
part
of
it
could
be
subject
to
tax. The
member
relying
on
the
decision
of
the
five
member Bench
reported
in
2015-TIOL-527-CESTAT-DEL-LB held that
works
contract
can
be
vivisected
prior
to
01/0612007 and
the
service
portion
can
be
subjected
to
levy
of
service tax.
In respect
of
extended
period,
the
member
noted that
the
same
is
a
question
of
facts
and
law
and
stated that
if
the
Appellant
had
a
bonafide
belief,
they
would have
reflected
the
transaction
as
an
exempted
service in
the
service
tax
return
and
by
not
doing
so,
they
hac suppressed
the
material
fact
from
the
department.
Further
it was also stated that though there are divergent views of various forums, a large number of them are based 0'" Oaelim Industrial Co. Ltd. (supra) which is irrelevant t the issue and the remaining are expressed after 200
Thus, when tax was rightfully discharged in respect : designing activities it ought to have been discharged 0 the installation activity being the dominant service in these contracts and accordingly extended period invokable.