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2018 (2) TMI 1054 - AT - Service TaxWorks contract service - appellants are engaged in supply and erection of raw water piping and pumping system for M/s Raj West Power Limited and Common Effluent Treatment Plant and RO System for ELDCO SIDCUL Industrial Park at Sitarganj in Rajasthan - Revenue entertained a view that the appellants are liable to service tax under works contract service and for the same, gross value which includes the materials supplied also should have been considered by the appellant - case of appellant is that they had separate contracts – one for supply of materials and another for execution of work either for erecting piping and pumping of raw water supply or for effluent treatment for two clients. Held that: - It is clear that the appellant had shown two contracts both dated 20/08/2007 in respect of Barmer Project. One is claimed to be supply contract and another is claimed to be erection contract. There is a coordination agreement dated 30/08/2007 - The said coordination agreement readwith the supply/erection contracts leads to an apparent conclusion that the intended purpose of both the parties is the supply and erection of raw water piping and pumping system. While examining the two contracts now contested in the present appeals, we note except for substitution of the word “contractor” for “supplier” the warranty or defects liability condition mentioned in Clause 34 of both the agreements are identical. It clearly establishes that as the supplier and contractor is one and the same the warranty and defect liability is to be on the appellant without any distinction for supply contract or erection contract. The defect liability clause in labour contract also talks about “defect in material”, “bad materials”. Materials are supplied in terms of supply contract which also carries same terms. This alongwith the scope of coordination agreement clearly reveals that the scope of composite works contract is clear and should be read together for the purpose of service tax. Composition scheme for works contract - concessional rate of duty - Held that: - If the erection contract is only a service contract there is no question of availing composition scheme available to works contract service. In fact, the appellants later switched over to payment of service tax with full rate without composition. This clearly reveals that action of the appellant is with full knowledge of the legal implication of the course of action for discharging service tax by them. Extended period of limitation - Held that: - the appellant is fully aware of the legal implications of service tax liability on composite works contract. Their act of first paying composition rate on what is claimed to be a service contract and later switching over to full rate of payment without composition clearly reveals the knowledge and deliberate intend of the appellant - extended period rightly invoked. Appeal dismissed - decided against appellant.
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