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2012 (11) TMI 494 - AT - Service TaxErection, Commissioning or Installation, Commercial or Industrial Construction, Works Contract, Goods Transport Agency - non inclusion of value of site material used in providing services - Held that:- As decided in C.S.T., BANGALORE Versus TURBOTECH PRECISION ENGINEERING PVT. LTD. [2010 (4) TMI 344 - KARNATAKA HIGH COURT] the question of liability under the works contract service was examined and it was held that it will be effective only from 01.06.2007. Therefore, for the period prior to 1-6-07, the meaning of 'Works Contract' as commonly understood i.e. a contract for work, and labour and in other words, a service contract has to be adopted, and it would not be correct to treat a work contract as something different from a service contract. If such a work contract is an indivisible service contract, whether or not involving use of goods which get consumed or get passed on to service receiver either as such or in changed form, and that service is taxable, the works contract will attract service tax and if the work contract is a composite contract involving sale of goods and one or more services and those service are taxable, the service tax will be chargeable on the value of these services. Thus a contract for erection, installation and commissioning, even if involving transfer of property in goods on which state VAT/Sale Tax is paid, would attract service tax even for the period prior to 1-6-07, Similarly a divisible contract involving consulting Engineer's service (preparation of drawings/designs, preparation of operation manuals, or other technical assistance), procurement of goods, erection, installation and commissioning would attract Service Tax on Engineering Consultancy component and erection installation and commissioning component even prior to 1-6-07. This is so there is nothing in Sec. 65(105) and Section 66 of the Finance Act, 1994 from which it can be inferred that the taxable services defined in various clauses of Section 65(105) have to be standalone services and will not attract tax, if they are provided along with other services or providing of the service involves supply/use of goods on which VAT or Sales Tax is payable. Under-valuation - the appellant had separately collected the amount in the cost of wind energy converter as site material which was in reality required for various services rendered for installation of wind mills there was under valuation of services such as electrical work, civil work, D.P. structure, metering etc. Also what was used to supply 4 items to sub-contractors for use in construction of foundation and the same were mentioned in the purchase order as free issue material thus prima facie it is conveyancing that these items cannot be considered as part of the wind energy converter and therefore inclusion of cost of these materials in the wind energy converter was wrong and showing them as free supply was also wrong. Having availed CENVAT Credit on input/input service, the appellant could not have taken the benefit of abatement. Therefore, prima facie, that charge has also to be upheld. The appellant has not been able to make out a prima facie case for complete waiver & as regards financial difficulty, no balance sheet or annual report was produced. The appellants should be required to deposit an amount of Rs.4.5 crores which is less than 10% of the total demand of Service Tax and less than 5% of the total amount of demanded as Service Tax, interest and penalty imposed.
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