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2022 (3) TMI 229 - AT - Service TaxLevy of service tax - management, maintenance or repair services - supply of tangible goods services - electric motor winding job - works contract services - composite services - present dispute is for the period 2009-2010 to 2012-2013 during which period the appellant carried out the following two activities under various work orders received from the Delhi Jal Board - time limitation - HELD THAT:- The work orders enclosed in the appeal paper book that the contract was not given by the Delhi Jal Board to the appellant to supply diesel Gensets although they were an important component of the contract. Supply of Diesel Genset was not the essence of contract. The essence of contract was making “supplementary arrangements for pumping water during power failure”. This arrangement required the appellant to supply Diesel Gensets, load them, unload them, check their batteries, operate them, connect them to the pump sets, when there is power failure and switch over the pumps back to the main line once the power is restored. Thus, the appellant was required to make the entire arrangements for pumping water when there was power failure - The appellant has already discharged service tax under the head Management, Maintenance and Repair Services. As far as the cost of diesel, mobile oil, etc. is concerned, these were required for the maintenance, incurred by the appellant and reimbursed by the Delhi Jal Board. Therefore, these reimbursements cannot be called consideration for rendering service. Therefore, the entire demand made in the show cause notice and confirmed in the impugned order towards supply of tangible goods service needs to be set aside. Electric motor winding job - HELD THAT:- Undisputedly this service required both winding of the motors and also using the materials required for such service. Thus, it was a composite works contract which involved both rendering service and supplying material. The Revenue also does not dispute that it is a composite contract. However, there is a break up in the contract and 20% of the total amount received is attributed by the Delhi Jal Board towards services and 80% towards material. The appellant has paid service tax on 20% and VAT on the 80% of the amount - the demand of service tax on the 80% of the value of the contract attributed towards the goods cannot be sustained. The issue is squarely covered in favour of the appellant by the decision of this Tribunal in COMMISSIONER OF SERVICE TAX VERSUS M/S. RAJ ENGINEERING [2016 (11) TMI 485 - CESTAT NEW DELHI]. At any rate, if the contract is for a composite works contract, it should be treated as a separate species of contract and it is chargeable to service tax only under the head of “works contract service”. The demand of interest and the penalties imposed also cannot be sustained and need to be set aside - Appeal allowed.
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