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2018 (7) TMI 1669 - AT - Service TaxClassification of services - Works contract or Erection, installation, and commissioning services? - EPC contracts - Benefit of abatement under N/N. 19/2003- ST dated 21.08.2003 and N/N. 1/2006-ST dt.01.03.2006 denied - period 01.07.2003 to 30.09.2007 - Imposition of penalty u/s 76 of FA - quantification of Interest under Section 75 of the Act - Held that:- From N/N. 12/2003-ST, dated 20.06.2003, it is clear that the credit can be denied only on the non-fulfilment of conditions (a) & (b), which is not the case in the present appeal. Therefore, the appellant is entitled for abatement as contained in the N/N.12/2003-ST, dated 20.06.2003 - This substantiated from the fact that the appellant has paid the VAT on the portion of the materials sold and used in the erection and commissioning of the plant and machinery under Local Taxes Act. Considering the nature of the contract entered by the appellants and the services rendered to their clients, it is beyond doubt that they are engaged in providing EPC contracts, which falls under the category of Works Contract Acts. - Registration under the wrong classification earlier by the assessee will not help the revenue - in the earlier classification of the appellant, the erection, installation and commissioning services, would not preclude them from the benefit under Works Contract Service. The levy of service tax on the works contract, has been the subject matter of the appeal before the Hon’ble Supreme Court in the case of Commr. of Central Excise & Customs, Kerala Vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], where it has been held that leviability of service tax prior to 1st June, 2007, whereafter Finance Act, 2007, expressly made such contracts liable to service tax is not as per the Scheme of Finance Act, 1994 - the service tax is not leviable on the appellant prior to 01.06.2007 and therefore, the demand is only left for the period from 01.06.2007 to September, 2007. The availment of sale of the materials is not important in the case of Works Contract Service even miniscule portion of the supply of material will render as Works Contract Service. The contract covered by the second agreement is appropriately classifiable under the Work Contract Service under the Finance Act, 1994 and not under the Erection, Commissioning and Installation Service, and therefore not chargeable to service tax prior to 01.06.2007 - However, for the period starting from 01.06.2007 to 30.09.2007, the appellant has paid the service tax under Erection, Commissioning and Installation Service after availing the benefit of Notification Nos.19/2003-ST dated 21.08.2003 and Notification No.1/2006-ST dt.01.03.2006, the same is required to be recomputed and any excess or short payment is required to be adjusted as per extant provisions under the Act/the Rules. Appeal allowed in part.
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