9911796707
TMI Blog2009 (8) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee directly for the benefit of National Thermal Power Corporation Ltd. (NTPC for short) for the period from 10-9-2004 to 31-3-2006. The rest of the demand is in respect of similar activity performed by the assessee under a subcontract awarded by M/s. Punj Lloyd Ltd. who was a contractor appointed by M/s. Jindal Power Ltd. for setting up a power plant. This part of the demand pertains to the period from 1-3-2006 to 31-12-2006. Obviously, in the first case, the assessee was directly executing a contract for NTPC, wherein they undertook the construction activities resulting in the setting up of a power plant. Those activities were undertaken during 10-9-2004 to 31-3-2006. In the second case, the assessee undertook similar activities as sub-contractor of M/s. Punj Lloyd Ltd., who were the contractors appointed by M/s. Jindal Power Ltd. Such activities were performed during 1-3-2006 to 31-12-2006. The Commissioner charged service tax, in the first case, on the gross amount paid to the assessee by NTPC, while, in the second case, service tax was charged on the gross amount paid to the assessee by the main contractor namely M/s. Punj Lloyd Ltd. When these demands were raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . counsel also referred to certain decisions viz. Diebold Systems P. Ltd. v. CCE - 2008 (9) S.T.R. 546 (Tri.-Chennai), Air Liquide Engineering India P. Ltd. v. CCE - 2008 (9) S.T.R. 486 (Tri.-Bang) and Soma Enterprise Ltd. v. CCE - 2009 (15) S.T.R. 559 (Tri-Bang.) = 2009-TIOL-1086-CESTAT-BANG. The ld. counsel has particularly mentioned that, in the case of Soma Enterprise, a similar activity undertaken by the assessee for the benefit of NTPC was held to be an activity in execution of "works contract" and hence not taxable for the period of dispute (prior to 1-6-2007). It has also been pointed out that the relevant provision of the works contract awarded to the assessee by NTPC in the present case is pari materia with the corresponding provision of the works contract awarded by NTPC to M/s. Soma Enterprise. On this basis, it has been argued that the issue under consideration is already covered in favour of the appellant by the Tribunal's decision in Soma Enterprise case. The counsel has also given a brief account of the Constitutional history of works contracts. Parliament by the 46th amendment to the Constitution of India enabled State governments to levy sale tax on the sale c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders issued under Section 37B of the Central Excise Act (as made applicable to service tax by Section 83 of the Finance Act, 1994) issued from time to time by CBEC, DG (ST) and various field formations on all technical issues including the scope and classification of taxable services, valuation of taxable services, export of services." This circular inter alia observes thus "views stated in the circular reflect the interpretation of the law and the current practice of the department. This circular is not to be treated as part of law and does not override the legal provisions. The relevant statutory provisions must be referred to and they will prevail." The operative part of the circular, relevant to the present case reads as under:- 999.03/ 23-8-07 A taxable service provider out-sources a part of the work by engaging another service provider, generally known as sub-contractor. Service tax is paid by the service provider for the total work. In such cases, whether service tax is liable to be paid by the service provider known as subcontractor who undertakes only part of the whole work. A sub-contractor is essentially a taxable service provider. The fact that ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head "commercial or industrial construction service." It is submitted that, given an opportunity, the appellant can satisfy the conditions attached to Notification 1/2006-ST., dated 1-3-2006 for the benefit of abatement. Contextually, it is pointed out that, before 1-3-2006, the appellant was paying service tax on the entire amount of taxable value and that they stopped paying on 1-3-2006 and also refrained from taking CENVAT credit on inputs, capital goods or input services. It is in this situation that the appellant is exuding confidence of being able to satisfy the conditions for abatement under the Notification (1/2006-S.T.). 5. We have given careful consideration to the submissions. Insofar as the service rendered by the appellant to NTPC during the period from 10-9-2004 to 31-3-2006 is concerned, we find that it is not in dispute that such service was covered by the definition of "construction service" upto 15-6-2005 and then by the definition of "commercial or industrial construction service" from 16-6-2005 to 31-3-2006. They were also registered with the Department in these categories during the respective periods. They were paying service tax, during the said periods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir case from that of Soma Enterprise, Diebold Systems P. Ltd. and Air Liquide Engineering (supra). We are of the considered view that the appellant should pay service tax under the above heads for the respective periods. We have also considered the counsel's argument that the assessee is not precluded from disowning tax liability notwithstanding their conduct. It has been argued that there is no estoppel in tax matters. Certain decisions have also been cited in support of this point. We have gone through the decisions (Dunlop India Ltd. etc.). In those cases, the plea of estoppel was raised by the Revenue in various situations, but we have not found a parallel between the present and those situations. Here is a case where a given activity/service was classified as "construction service" for the period upto 15-6-2005 and as "commercial or industrial construction service" for the subsequent period, by both the assessee and the Revenue. Service tax was voluntarily paid, accordingly. As we have already noted, "works contract" was introduced as taxable service for the first time with effect from 1-6-2007, something which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the main contractor paid service tax. The appellant, therefore, is not liable to pay service tax, according to them. In this connection, the ld. counsel has relied on a few circulars. In Circular No.B-11/3/98-TRU, dated 7-10-1998, CBEC clarified that, where a work was subcontracted by one architect to another architect, the sub-contractor was not required to pay service tax if the principal contractor paid such tax on the service. In Circular No. B-43/1/97/TRU, dated 6-6-97, the Board rendered a similar clarification in respect of "CHA service". In Circular No.B-43/5/97-TRU, dated 2-7-97, a similar clarification was given in respect of "consulting engineer's service". In Circular No.B-43/7/97-TRU, dated 11-7-97 a similar clarification was given in respect of "rent-a-cab service". It has been submitted that all these circulars were in force till they were superseded on 23-8-2007. We have already extracted the relevant portion of the circular dated 23-8-2007 wherein sub-contractors of taxable services were also held to be liable to pay service tax in the same manner as the main contractors. Obviously, insofar as the sub-contractors of taxable services are concerned, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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