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2017 (1) TMI 308 - AT - Service TaxComposite contract with foreign supplier - erection, commissioning or installation services and consulting engineering service - technical assistance, engineering knowhow training etc - Held that: - It is evident that the contract involves both supply of goods as well as rendering of various services. Such contracts would be covered within the category of works contract service as a separate service in the statute w.e.f. 01/06/2007 - The Hon’ble Supreme Court in the decision of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] has categorically held that any contract in the nature of works contract cannot be vivisected into its various elements and charged to service tax separately for the period prior to 01/06/2007 when WCS was introduced in the statute - In the present case the import of the machinery alongwith the associated services was complete during the period 2005-2006, before the introduction of WCS. Consequently, we are of the view that the levy of service tax on the service elements by vivisecting the composite contract cannot be upheld. The levy has been upheld on the basis of reverse charge mechanism. Section 66A was introduced into the statute w.e.f. 18/04/2006 providing for levy of service tax on reverse charge basis on the import of service. The position of law is well settled that prior to this date, service tax cannot be levied on reverse charge basis. In the present case, the period of dispute is 2005-2006 - Since all such invoices are prior to 18/04/2006, we have no hesitation in holding that the entire demand of service tax merits to be set aside. Appeal allowed - decided in favor of appellant.
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