TMI Blog2015 (5) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2007 and not under Erection, Commissioning or Installation Service (ECIS) Construction of canals for irrigation or water supply; construction or laying of pipelines/ conduits for lift irrigation conceived and integrated into a dam project, must be classified as works contract "in respect of dam" and is thus excluded from the scope of "Works Contract Service" defined in Section 65(105)(zzzza) of the Act, in view of the exclusionary clause in the provision; Turnkey/ EPC project contracts, enumerated in clause (e), Explanation (ii) in Section 65(105)(zzzza) of the Act is a descriptive and ex abundant cautela drafting methodology. In the light of the decision in Alstom Projects India Ltd ., fortified by the Special Bench decision (dated 19.03.2015) in Larsen & Toubro Ltd. reference, a turnkey/ EPC contract is taxable prior to 01.06.2007 as well. On and since 01.06.2007, turnkey/ EPC contracts must be classified on the basis of the essential character of the service provided thereby, with the aid of classification guidelines set out in Section 65A(2) of the Act. Consequently, a turnkey/ EPC contract must be classified under any of the clauses (a) to (d), Explanation (ii), Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/ contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act. - Service Tax Appeal Nos. 441, 606, 607, 898, 937 AND 211 of 2009 , Service Tax Appeal Nos. 398, 425, 1210, 1850 AND 2148 of 2010, Service Tax Appeal Nos. 918, 919, 920, 921, 922, 2818, 2819, 2820 AND 3174 of 2011 - Interim Order Nos. 57 to 112/2015 - Dated:- 28-4-2015 - G Raghuram, President , Ms Archana Wadhwa, Member (J) And Mr B S V Murthy, Member (T),J. For the Appellants : Shri V Sridharan, Shri S R Ashok, Sh S Ravi, Sr. Advs; Shri B V Kumar, G Natarajan, Md Shafi, K Vijay Kumar, R Murlidhar and Ms Nisha Bineesh, Advs For the Respondents : Shri Govind Dixit and Shri Amresh Jain, ARs M/s JAYAPRAKASH GAYATHRI PROJECTS LTD , M/s GAYATHRI BCBPPL , M/s RAMKY INFRASTRUCTURE LTD , M/s GAYATHRI PROJECTS LTD , M/s NCC LTD, M/s L AND T KBL , M/s L AND T LTD , M/s RAMKY INFRASTRUCTURE LTD, M/s KOYA AND C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Of these, in 19 appeals stay applications were pending disposal and Revenue contended that these appeals be not disposed of without considering waiver of pre-deposit and grant of stay. It was also urged that in ST Appeal Nos. 03174/2011 and 26382/2013, stay applications are pending consideration. In ST Appeal Nos. 3146/2011, 3147/2011, 254/2012 and 25302/2013, appellants Counsel contended that some substantive issues and regarding quantum of pre-deposit to be made, were pending before the Andhra Pradesh High Court. On behalf of Revenue, the contention on behalf of assessees that some aspects of the issues involved in these appeals were pending consideration before the Andhra Pradesh High Court, was not contested. Shri B. V. Kumar, learned Counsel also pointed out that in S. T. Appeal No. 3394 of 2012, the liability is also confirmed on the basis that the appellant (SCL Infratech Ltd.) had also provided Business Auxiliary Service and was the recipient of Management and Business Consultancy Service wherefor the liability was confirmed on reverse charge basis, erroneously. 4. Appellants are the assessees, who had provided construction related and other categories of composite, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hear and dispose of issues which are common, excluding the issue whether works contract was a taxable service prior to 01.06.2007. All parties agreed to this course of action. On behalf of the several Counsel, five issues were identified for disposition by this Bench. Revenue does not demur. The issues presented for our consideration are: Issues : A) Whether laying of pipelines for lift irrigation systems, transmission and distribution of drinking water or sewerage, undertaken for Government/ Government undertakings should be classified under ECIS as erection, commission or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise; or installation of plumbing, drain laying or other installations for transport of fluids, enumerated in Section 65(105)(zzd) and defined Section 65(39a), during 16.06.2005 to 31.05.2007; or must be classified under CICS, as amounting to construction of pipeline or conduit ; and if classifiable under the later provision, whether the activity is not taxable since it is not used or to be used, engaged or to be engaged primarily for industry or commerce; B) Whether construction of canals for irrigation purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved are pending consideration before the A.P. High Court), 56 appeals are left for consideration. In view of the submission that disputed questions of fact; of issues pertaining to other taxable service; of interpretation of terms of the agreements in issue; valuation disputes; and issue of taxability of WCS prior to 01.06.2007 are involved, we take up the five issues set out in the preceding paragraph, for consideration and determination. After recording our conclusions on the five issues we shall remit the appeals for determination on merits, to the appropriate Bench, to be disposed of, in accordance with law and the conclusions recorded by this Bench, on the five issues we pronounce our conclusions on. 9. Ld. Counsel for appellants furnished a consolidated list of appeals, setting out the respective appeal numbers; description of the appellant; the period involved; the quantum of service tax and penalties confirmed; the nature of the work undertaken, specifying whether the confirmed demand is on the appellant as the main contractor, while the actual work was wholly executed by a sub-contractor. From the consolidated tabulated list provided by ld. Counsel we have retabul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ix) Govt. of Jharkhand - Drinking water and Sanitation Dept. Dhanbad Water Supply Scheme, Phase-II. Yes ST/1210/2010 M/s Ramky Infrastructure Ltd. - WPIL JV. 6/2008 to 3/2009 Execution of Pumping Station. Yes ST/918/2011 M/s IVRCL - Navayuga SEW JV 6/2007 to 9/2008 Execution of Sripada Sagar Project - Phase-I. The work involves investigation, soil exploration, design, supply installation, testing and commissioning of pumping machinery, transformer sub-stations, raising mains, construction of pump houses and other civil structures, channels without lining and deliver cistern, etc. Yes ST/919/2011 M/s IVRCL-JL-JV 6/2007 to 9/2008 Execution of HNSS Lift Irrigation scheme and the work involves pipelines/ conduits. The scope of the work involves investigation, designs, construction of pumping stations, erection, commissioning and testing of mechanical and electrical accessories, civil works, pump house including sumo, pumping mails, etc. HNSS main canal and Branch can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved: i) Pilot Micro Irrigation scheme under Gandikota Reservoir; and ii) Pada Lift Irrigation sceheme - Gandikota Reservoir. The scope of work involves laying of pipelines as part of lift irrigation work, drawing water from Gandikota Reservoir. Yes ST/221/201M/s PES-SEW-JV 3/2008 to 9/2008 Supply, design, fabrication, transportation erection of steel liner, penstock and appurtenant works of Myntdu Leshka Hydro Electrical Project (2x24 MV) for the State Electricity Boad. Yes ST/1676/2012 M/s L T KBL JV 10/2008 to 9/2009 Package No. L104/06-07- investigation, design, supply and erection of necessary lift systems with all electrical and mechanical components, surge protection systems and all control valves for lifting 7.50 TMC in 45 days from storage Reservoir-3 (+260.00M) including improvements to Goddumarri Anicut to provide a capacity of 0.07 TMC in Anantapur District. Yes ST/3311/2012 M/s L T KBL JV 10/2009 to 9/2010 Package No. L104/0607- investigation, design ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imation and excavation of right main canal, distribution system including construction of CM CD works from Shankara Samudram balancing reservoir, Kanaipally (v) Kothakota (M) Mahaboobnagar District to feed 8000 acres. Yes ST/20893/2014 M/s Navayuga-IVRCL- SEW-JV 6/2007 to 9/2011 Execution of pumping station Yes ST/20921/2014 M/s NEC-NCC Maytas JV 6/2007 to 9/2011 Bheema Lift Irrigation Project - Civil works for pumping stations. Yes ST/20922/2014 M/s SEL-GKC Projects JV 2008-2012 Flood Flow Canal Project Yes 11. In the following appeals the execution was undertaken by the appellant itself, not sub-contracted. TABLE - B Appeal No. Name of the Appellant Period involved Nature of the work undertaken Whether the demand is on the main contractor and the actual work was executed by the sub-contractor ST/441/2009 M/s Lanco Infratech Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Formation of flood banks. No ST/2820/2011 M/s GKC Projects Limited 2009-10 Formation of flood banks. No St/131/2012 M/s Patel Engg. Ltd. 12/2005 to 9/2009 i) Bhima Lift Irrigation Project (ii) Nattampadu Lift Irrigation Project Stage-I, II (iii) Kalwakurthy Lift Irrigation project (iv) Modernisation of Krishna Delta System Package-I, IV, VII, X, XI, XIV. No. ST/501/2012 M/s Megha Engg. Infrastructure Ltd. 6/2005 to 3/2010 Various lift irrigation projects and water supply projects, all involving laying of pipelines and other associated works (The demand has been made under ECIS from 16.6.2005 to 31.5.2007). No ST/2290/2012 M/s Sudhakar Polymers Ltd. 01.06.2007 to 03.05.2011 Laying of pipelines. No ST/3394/2012 M/s SCL Infratech Limited 10/2005 to 12/2010 - No ST/343 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater and Sanitation Deptt. -Dhanbad Water Supply scheme, Phase-I. Ix) Govt. of Jharkhand - Drinking water and Sanitation Deptt. Dhanbad Water Supply Scheme, Phase-II. No ST/26452/2013 M/s Koya Co. Constructions Pvt. Ltd. 6/2007 to 3/2011 Venkatanagaram Pumping Scheme, Guthpa Lift Irrgation scheme, Telugu Ganga Project, Narmada Canal Project, Water supply pipeline laying work in various municipal cities. No ST/26453/2013 M/s Koya Co. Constructions Pvt. Ltd. 10/2009 to 9/2010 Venkatanagaram Pumping Scheme, Guthpa Lift Irrgation scheme, Telugu Ganga Project, Narmada Canal Project, Water supply pipeline laying work in various municipal cities. No ST/28834/2013 M/s Patel Engg. Ltd. 10/2009 to 9/2010 i) Bhima Lift Irrigation Project, (ii) Nattampadu Lift Irrgation project Stage-I, II (iii) Kalwakurthy Lift Irrgation project (iv) Modernisation of Krishna Delta System Packages-I, IV, VII, X, XI, XIV No ST//20224/2014 M/s Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST/25529/2013 M/s R.M. Mohite Co. Bhooratnam JV 6/2007 to 7/2009 10.09.2009 Bhima Lift Irrigation Project - Package No. 13 - Investigation design estimation and excavation of high level RIGHT MAIN CANAL, distributor system including construction of CM CD works etc. to feed ayacut of 28,400 acres under Sangambanda balancing reservoir, Sangambanda (V) Makhthal (M) Mahboobnagar District on EPC Turnkey basis. Section 105(zzzza) Explanation (ii)(b). Some were executed by the appellant and some were sub- contracted. 13. Since we are not disposing of the appeals on merits, we have recorded assertions by ld. Counsel as to the nature of works executed, the period stated to be involved, and whether the execution was wholly sub-contracted, executed by the appellant itself or partly by the appellant and partly sub-contracted, as per the information furnished in the consolidated list. In its written submissions Revenue does not contest these assertions by ld. Counsel for the appellants, presumably since appeals are not being finally disposed of by this Bench. In the circumstances, all contested issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uipment. W.e.f. 16.06.2005 Section 65(39a) was again amended. Since the transactions in issue fall on and since this date, we extract definition of ECIS as it stands w.e.f. 16.06.2005. From 16.06.2005: Section 65(39a) : erection, commissioning or installation means any service provided by a commissioning and installation agency in relation to,- (i) Erection, commissioning or installation of plant, machinery or equipment; or (ii) Installation of- (a) Electrical and electronic devices, including wirings or fittings therefor; or (b) Plumbing, drain laying or other installations for transport of fluids; or (c) Heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work; or (d) Thermal insulation, sound insulation, fire proofing or water proofing; or (e) Lift and escalator, fire escape staircases or travelators; or (f) Such other similar services; The definition was further amended w.e.f. 01.05.2006. It now reads: From 01.05.2006: Section 65 (39a): erection, commissioning or installation means any service provided by a commissioning and installation agency, in relation to,- (i) Erection, commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of, or similar services in relation to, building or civil structure, pipeline or conduit, Which is- (i) Used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams; W.e.f. 16.6.2005, Section 65(105)(zzq) was also amended to reflect the re-designation and re-definition of construction service as commercial or industrial construction service . An Explanation was added to sub-clause (zzq) w.e.f. 01.07.2010, which is however not relevant to this lis. Counsel for the appellants point out that w.e.f. 16.06.2005 a service known as site formation service was introduced and specified to be a taxable service in Section 65(105)(zzza); defined in Section 65(97a) to mean a service provided or to be provided to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other activities. Section 65 (97a): Site formation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s defined to mean (to the extent relevant for our purposes) (a) construction of a new building or a civil structure or a part thereof; or (b) construction of a pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and well papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is used or to be used; engaged or to be engaged, primarily in commerce or industry or work intended for commerce or industry. There is however exclusion of CICS when provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. From the several decisions cited before us (covering the period prior to 01.06.2007), it is seen that Revenue had not adopted a uniform approach to classification of laying of pipelines for lift irrigation, supply of drinking water or sewerage purposes under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.7.03. Argument that the pipeline was not installed or commissioned by IHPL was misleading. The activity involved laying, jointing, testing and commissioning of PVC pipes which resulted in emergence of a pipeline. The works contract between IHPL and its clients against the turnkey contracts prescribed completing the entire work satisfactorily and commissioning within the stipulated period and maintaining the scheme for the specified period. Pipes were used for transporting water for distribution and hence fell within the definition of equipment. Equipment was a set of necessary tools, clothing etc. for a particular purpose. The exclusion of long distance pipeline from construction service did not mean that same item could not be charged to tax under another heading. Clause (30a) underwent a change in 2005 budget omitting this exclusion. The impugned service was not in the course of commerce and had to be classified under erection, installation or commissioning service. The Daelim Industrial Company (supra) was not relatable to the present case. The Daelim Industrial Company case decided that a works contract could not be vivisected and the service portion subjected to tax. SLP fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n installation. It applies to machinery already made which are formally made ready to operate at the site. Installation implies setting up the machinery ready for use, like giving power connections or installing driver software in the case of a machine run with the aid computer software. Commissioning involves the operationalisation of the machinery after which it starts functioning regularly. In laying of long distance pipeline, earth is dug and pipes laid and jointed, and the pipes pass through sumps with boosters at intervals, if necessary. This activity will not involve erection. 8.2 As rightly argued by IHPL, the CBEC Circular No. 62/11/2003-ST., dated 21.8.2003, inter alia, clarified the levy to the same effect as follows: 1.2 As commonly understood, the activity of installation means the act of putting an equipment, machinery or plant into its place and making it ready for use. The activity of installation will start after erection which would refer to putting up civil structures, commissioning of a plant would mean operationalising an installed plant/ equipment/ machinery. Whereas erection became part of the entry only from 10.09.2004, from 16.6.05 onwards meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in Strategic Engineering Pvt. Ltd. vs. Additional Commr. C. Ex. Mumbai 2011 (24) STR 387 (Mad.) allowed the writ petition against an adjudication order classifying pipeline laying as ECIS. During 10.09.2004 to 16.06.2005, construction service defined in Section 65(30a) excluded service when provided in relation to long distance pipeline , from the scope of the definition. W.e.f. 16.06.2005 construction of pipeline of conduit was included in the definition of CICS, defined in Section 65(25b). Apart from the decisions referred to above which consistently ruled that construction of a pipeline for transmission of water or sewerage falls outside the scope of ECIS, it requires to be noticed that construction of pipelines involves associated works such as digging trenches, construction of supporting masonary structures, jointing of pipes; and in cases of construction of pipelines for lift irrigation, pumping / booster stations and other electro-mechanical works as well. Therefore construction of a pipeline does not amount to other installations for transport of fluids , a clause in Section 65(39a)(ii)(b), but is more appropriately classifiable under CICS, falling within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich cannot be classified in the manner specified in clause(a), shall be classified as if they consisted of a service which gives them their essential character, insofar as this criterion is applicable; (c) When a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration. The Board addressed a communication dated 07.01.2010 forwarding a clarification on an advice sought from the Commissioner of Central Excise, Mysore with regard to leviability of service tax on construction of integrated structures by KSRTC, which were to serve as a commercial complex and a bus terminal. The Board after stating that a single construction contract for construction of a commercial complex as well as a transport terminal cannot be vivisected for the purpose of levy of service tax, added that a solution must be found as laid down in Section 65A(2) of the Act. The Board clarified: Though, this provision is intended to be applied to cases where two distinct taxable services are provided in a composite manner, the principle laid down therein can nonetheless b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts railways, transport terminals, bridges, tunnels and dams. Explanation: For the purposes of this sub-clauses, works contract means a contract wherein,- (i) Transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) Such contract is for the purposes of carrying out,- (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) Construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusions of the aforementioned two taxable services (amongst others) and it is the nature of the contract (i.e. a contract wherein the transfer of property in goods involved is leviable to a tax as sale of goods) rather than the nature of activities undertaken, that distinguishes it from the previously stated taxable services. Thus, even in the case of -works contract' if the nature of the activities is such that they are excluded from aforesaid two services then they would generally remain excluded from this taxable service as well. (emphasis added). (b) Section 65(105)(zzzza) Explanation (ii)(e) specifies turnkey projects including engineering, procurement, construction or commissioning (EPC) projects , as a works contract. The terms EPC / Turnkey denote the mode of and the integers embedded in execution of large projects. There is no statutory definition provided of these terms. The following are the definitions of EPC / turnkey contracts as per technical Dictionaries. (a) Dictionary of Civil Engineering - John S. Scott (4 th Ed.). Turnkey contracts/ design and build contract/ design and construct contract / package deal contract - An agreement between client ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Employer does not wish to be involved in the day-to-day progress of the construction work, provided the end result meets the performance criteria he has specified - and the Employer is willing to pay more for the construction of his Project (than would be the case if the Conditions of Contract for Plant and Design-Build were used) in return for the Contractor bearing the extra risks associated with enhanced certainty of final price and time . (ii) EPC - Engineering Procurement Construction EPC stands for Engineering, Procurement, Construction and is a prominent form of contracting agreement in the construction industry. The engineering and construction contractor will carry out the detailed engineering design of the project, procure all the equipment and materials necessary, and then construct to deliver a functioning facility or asset to their clients. Companies that deliver EPC Projects are commonly referred to as EPC Contractors. The EPC phase of the project is also known as the Execution phase which normally follows what is know as a FEED or Front End Engineering Design phase. The FEED is a basic engineering design used as the basis for the EPC phase. The FEED c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construct or EPC ) places the duty to design and construct solely on the contractor. The term turnkey tends to mean the most extreme form of placing design and construction responsibility on the contractor, such that after completion the employer need only to turn the key. Notwithstanding this, the term turnkey will be used here to describe the more general global arrangement of placing all design, procurement and construction responsibilities on one contractor. The turnkey system generally uses the lump sum pricing method . (g) Distinction between EPC and Turnkey contracts - Wikipaedia - EPC is a contract comprising Engineering, Procurement and Construction. Turnkey is a contract comprising Engineering, Procurement and Construction. If you look at the definition, you may find no difference between two concepts, but there are some differences between the two concepts, as follows. 1. In EPC, there is an employer who will provide basic engineering to contractor and the later shall perform detailed design based on received basic design. 2. In turnkey, employer only will provide certain technical specifications of the project and that is the responsibility of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above services, apart from defined components of ECIS, CICS or COCS would invariably be bundled into an EPC/ Turnkey mode of execution of a works contract defined in Section 65(105)(zzzza). (v) Sub-clause (e) is introduced to avoid interpretational complexities and classification of complex and bundled services which are integers of agreements involving transfer of property in goods coupled with rendition of several varieties of services, involved in a works contract in execution of major infrastructure or development projects. (vi) In many of the appeals, earth excavation, forming embankment and construction of channels, excavation of feeder canals, flood flow canals, canal systems, canal lining with either cement concrete, geo-membrane or geo textiles etc. for irrigation, lift irrigation, water supply, or sewerage purposes, is involved. Clause (b) of the definition of works contract includes a pipeline or conduit, primarily for the purpose of commerce or industry . The words pipeline and conduit are not defined. Conduit , according to general and technical Dictionaries means a passage for water or any other liquid; and a conduit can be either closed like a pip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usually used across broad rivers to retain water. Concrete dams may take various forms; (ii) Cambridge Dictionary - a wal l built across a river that stops the river's flow and collects the water, especially to make a reservoir (an artificial lake) that provides water for an area ; (iii) Oxford Dictionary - a barrier constructed to hold back water and raise its level, forming a reservoir used to generate electricity or as a water supply; (iv) Collins Dictionary - a barrier of concrete, earth etc., built across a river to create a body water, as for domestic water supply; a reservoir of water created by such a barrier something that resembles or functions as a dam ; and (v) Wikipaedia - a dam is a barrier that impounds water or underground streams. Dams generally serve the primary purpose of retaining water, while other structures such as floodgates or levees (also known as dikes) are used to manage or prevent water flow into specific land regions. A dam can also be used to collect water or for storage of water which can be evenly distributed between locations (e) From the above meanings of dam it is clear that it is a barrier erected for impounding water and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r civil construction , clause (e) dealing with EPC/ turnkey projects does not specify a part of EPC/turnkey projects as the taxable service. In all appeals, since the appellants executed only a part/ package of the overall project, for a limited distance of the whole, the work cannot be considered as EPC/ Turnkey, notwithstanding its description as such in the relevant agreements. (h) Section 65(97a) defines Site Formation and Clearance, Excavation Earthmoving and Demolition , which service is defined to include- (i) drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or (ii) soil stabilization; or (iii) horizontal drilling for the passage of cables or drain pipes; or (iv) land reclamation work; or (v) contaminated top soil stripping work; or (vi) demolition and wrecking of building, structure or road, But does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies . The various activities awarded in agreement in issue in some of the appeals include earthmoving, excav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls etc., of those areas; (iii) In view of the decision in Bangalore Water Supply and Sewerage Board and Others vs. R. Rajappa and Others AIR (1978) SC 548, whether a particular body is an industry is not dependent on whether the activity thereunder is undertaken by corporate body in the discharge of its statutory functions or even by the State itself. It is only the process involved in the activity, objectively viewed which is the determinative factor in deciding whether the activity is an industry. Hence, it cannot be said that supply of water or creation of an irrigation distributory scheme or a lift irrigation project is not for industrial purposes. (iv) Dam (which is excluded from the scope of the taxable service in the definition of WCS), means only the civil construction and installation of gates extending to the stretch of the river or stream. A Dam is confined to that portion of the structure which obstructs the natural flow of water in a river or a stream. No civil construction, structure or installation extending beyond the main Dam structure would fall within the meaning of the word Dam . Thus, canal systems which originate beyond the main Dam structure cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessees contention that where contracts involve only a package or a specified distance out of the overall project, it would not constitute an EPC/ Turnkey Project and only when the entirety of the larger project is executed by one entity it would amount to EPC/ Turnkey project, is misconceived. The definition of WCS, in clause (e) under Explanation (ii) thereof does not specify any such requirement. Even if a portion, package or a reach of the entire and larger project is awarded to a contractor and that portion, package or reach answers the description of EPC/ turnkey, the same would be taxable under clause (e). In each of the contracts in issue, the terms thereof stipulate that it is an EPC / turnkey project. All these contracts therefore fall within the ambit of EPC turnkey projects, under clause (e) under Explanation (ii) of WCS. 18 . ANALYSES OF ISSUES (B); (C) and (D) : (a) WCS was introduced by the Finance Act, 2007 w.e.f. 01.06.2007 by insertion of sub-clause (zzzza) in Section 65(105) of the Act. The provision reads: Section 65 (105) (zzzza) : to any person, by any other person in relation to the execution of a works contract, excluding works contract in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be taxable services elsewhere enumerated in the Act to be so. b. Before proceeding to a detailed analyses of these issues, it is necessary to consider whether EPC/ turnkey projects were taxable prior to 01.06.2007 and if so how such projects ought appropriately be classified amongst the several taxable services that were in force prior to 01.06.2007. In Alstom Projects India Ltd. vs. Commissioner of Service Tax, Delhi 2011 (23) STR 489 (Tri.Del); a Division Bench of this Tribunal concluded that EPC contracts are chargeable to service tax even prior to 01.06.2007. The following observations in para 6.2 of this judgment are relevant: (2) The entry Service in relation to execution of work contract as defined in Section 65(105) (zzzza) is different from services defined in other sub-clauses of Section 65(105). In fact, as discussed above, Section 65(105)(zzzza) read with Rule 2A of Service Tax (Determination of Value) Rules, 2006 and work Contract (Composite Schemes for Payment of Service Tax) Rules, 2007 only provide a new machinery provision for assessment of service tax on Erection, installation or Commissioning Contracts , Commercial or industrial construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract must be classified (prior to 01.06.2007), under CICS. The special Bench decision in the recent Larsen Toubro Limited reference ruled that works contract is taxable prior to 01.06.2007 as well. Earlier, in Indian Hume Pipe Co. Limited (supra considered in para 15(i)], Revenue contended that the contract in issue was a turnkey contract. We concur with the ruling in Alstom Projects India Limited that turnkey/ EPC contracts were taxable prior to 01.06.2007 as well, on classification under the appropriate taxable service applicable. Where such construction is for Government / Government undertakings, for providing irrigation, water supply, sewerage disposal or lift irrigation facilities, the activity being not primarily for commercial or industrial purposes but for delivering the affirmative obligations of the State or a State instrumentality under the Constitution, the transaction would stand excluded from liability to tax under CICS, as not being primarily for commercial or industrial purposes. We notice that another Division Bench, in Ramky Infrastructure Limited vs. CST, Hyderabad 2013 (29) STR 33 (Tri. Bang) expressed a contrary view to that expressed in Alstom Project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax as is the case under consideration . This conclusion is per incurium the judgment of the Supreme Court in Larsen Toubro Limited (SC.2008), which we shall advert to in detail, later herein. In view of the special (5 member) Bench decision in the Larsen Toubro Limited reference, it follows that a works contract is exgibile to service tax even prior to 01.06.2007. In view of Indian Hume Pipe Co. Limited ; and Alstom Projects India Limited it follows that a turnkey / EPC contract is exigible to service tax prior to 01.06.2007, under the appropriate taxable service such as ECIC, CICS or COCS. From this position it inexorably follows that clauses (a) to (e) of the definition of WCS in Explanation (ii) thereof are enumerations of taxable services drawn substantially from definitions and integers of existing taxable services such as ECIS, CICS and COCS. From the decision in Indian Hume Pipe Co. Limited and other decisions [referred to in paras 15(i) and (ii) (supra)], it is clear that laying of pipelines/ conduits for transmission of water or for disposal of sewerage falls within the ambit of CICS and not ECIS; and where provided to Government/ Government undertakings and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent relevant for this part of our analyses, defines the service as one provided or to be provided in relation to the execution of a works contract, excluding works contract in respect of , ...... Dams . On its text, the definition of WCS excludes works contract in respect of dams . The expression in respect of means: (i) P. Ramanatha Aiyar's - The Law Lexicon : In respect of . The words 'in respect of' convey some connection or relation between the plaintiff's claim and the personal injuries that he sustained. Paterson vs. Chandwick (1974) 2 All ER 772, 775 (QBD). (Administration of Justices Act, 1970, S.32 (1)). Giving the words 'in respect of' 'their widest meaning viz. 'relating to' or 'with reference to' it is plain that this relationship must be predicated of the grant, renewal or continuance of a lease and a lease must come into existence simultaneously or nearabout the time that the money is received. Tularam Relumlal v. State of Bombay, AIR 1954 SC 496. (Bombay Rents, Hotel and Lodging House Rates (Control) Act (57 of 1947) S. 18 (1)). The expression in respect of is wider in its connotation than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi) Saharanpur Light Railway v. Upper Doabs Sugar Mills Ltd. AIR 1960 SC 695: (1960) 2 SCR 926. The words in respect of are of very wide amplitude and the suit must have relation to or must have reference to an act purporting to be done by a public officer in his official capacity. State v. Venkata Durga AIR 1957 AP 675. (iv) The expression in respect of , occurring in Section 23(1b) of the Foreign Exchange Regulation Act, 1947 was considered in Union of India (UOI) and Anr. Vs. Vijay Chand Jain (1977) 2 SCC 405, the Court explained: The words in respect of admit of a wide connotation; Lord Greene M1, in Canard's Trustees v. Inland Revenue Commissioners 174 L.T. Rep. 133 calls them colourless words. This Court in S.S. Light Railway Co. Ltd. v. Upper Doab Sugar Mills Ltd. and Anr. MANU/SC/0011/1960: 1983 CriLJ1044 construing these words in Section 3(14) of the Indian Railways Act, 1890 has held that they are very wide. It seems to us that in the context of Section 23(1B) 'in respect of' has been used in the sense of being 'connected with', and we have no difficulty in holding that the currency in respect of which there has been contravention covers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, warehouses, cranes and other similar things will be used and it is arguable that in using the words in respect of the legislature had such user in mind. It is well to notice however that the legislature must have been equally aware that whereas in some cases accommodation provided by stations will be used, in some cases sidings will be used, in other wharves, in other warehouses and in other cases cranes, and in certain cases several of these may be used, in most cases there will be no use of all of these. From the practical point of view it is impossible to regulate terminal charges separately in respect of user of each of these several things mentioned. When therefore the legislature authorised the Central Govt., to fix terminals leviable would not depend on how many of these things would be used. It is also worth noticing that the user of a depot, warehouse and cranes would necessarily mean some service rendered thereat . If terminals did not include charges in respect of the provisions of depots, warehouses and cranes unless these were used, there would be no need of including these in the first portion as they would be covered by the second part of the definition, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to this view that provision of station accommodation and sidings entitled the Railway Administration to levy terminal charges . When the Indian Legislature adopted the same definition in its own Act it is proper to think that it also was aware of the view taken in Hall's case (2). This consideration fortifies the conclusion which we have already reached on an examination of the scheme of our own Act, apart from authorities, that the words in respect of used in s.3(14) in the definition of (2) (1885) 15 K.B. 505 . (vi) The Orissa High Court in Godavaris vs. Nandkisore Das AIR 1953 Ori 111; The Madras High Court in State of Madras vs. Chitturi Venkata Durga Prasadarao and Ors . AIR 1957 A.P. 675; the Patna High Court in Commissioner of Income Tax vs. Chunilal Rameshwar Lal AIR 1968 Pat 364; the Allahabad High Court in Har vs. Hans Ram and Ors. AIR 1966 All 124; and the Delhi High Court in Commissioner of Income Tax vs. Bharat Heavy Electrical Ltd. - 2012-TIOL-727-HC-DEL-IT. AIR 1953 Ori 111 , uniformly interpreted the phrase in respect of as a comprehensive expression, to be construed in a broad sense and as bearing a wider connotation and compass. The Canadian Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an Act. Revenue's contention, that since Notification No. 41/2009-ST (prospectively) exempts execution of works contract in respect of canals, other than those primarily used for the purposes of commerce and industry from the levy of tax, it must be presumed that but for this exemption, construction of canals is taxable under WCS, is misconceived. Whether construction of canals is excluded from the levy of tax under WCS must be considered independent of an exemption Notification, on primary analysis of the relevant provision; and if on such construction this activity is found to be excluded from the purview of the definition of WCS, an exemption Notification cannot negate the proper interpretation to be put upon the definition of WCS. (ix) With introduction of the negative list regime w.e.f. 01.06.2012, Section 66B of the Act is the charging provision and enjoins levy of service tax on the value of all services, other than those specified in the negative list, provided or agreed to be provided. The negative list of services is specified in Section 66D. Clause (h) of Section 66E (enumerating Declared services) specifies service portion in the execution of the works contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or industry (even under turnkey /EPC mode) is specifically exempted from levy qua Notification No. 49/2009-ST dated 23.10.2009; and (d) w.e.f. 01.06.2012, on introduction of the negative list, construction of canals, dams or other irrigation works, pipeline conduit or plant for water supply, water treatment or sewerage treatment or disposal is exempt w.e.f. 01.06.2012 itself, vide exemption Notification No. 25/2012-ST dated 20.06.2012. (g) Nevertheless, Revenue would argue, construction of canals under EPC/ turnkey mode of execution is leviable to tax under sub-section (e) to Explanation (ii) of Section 65(105)(zzzza). (h) EPC/ turnkey projects for construction of dams and canal systems for irrigation, water supply or sewerage disposal, laying of pipelines for transmission of water as in the case of lift irrigation systems or for transmission of sewerage, clearly fall within the ambit (prior to 01.06.2007) of CICS, in view of the decision in Alstom Projects India Limited. A Larger (special) Bench of this Tribunal in the reference in the case of Larsen Toubro Limited (vide the majority judgment dated 19.03.2015) ruled that a works contract is taxable even prior to 01.06.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f canals or laying of pipelines/ conduits would not be taxable in view of the exclusionary clause in the definition of WCS. Section 65(105)(zzzza) defines WCS (in the pre ambular portion) as an activity in relation to the execution of a work contract excluding works contract in respect of dam , road, airports, railways, transport terminals, bridges, tunnels and dams . (k) Is construction of canal systems under works contract not a works contract in respect of dams? On a true and fair construction of the definition of WCS (extracted in the preceding sub para), the provision employs the expression in respect of ........ dams as an activity excluded from the scope of the levy. Earlier in the analyses herein we have noticed that the expression in respect of is an expression having a wider connotation and bears the widest possible scope. The decision in S.S. Light Railway Co. Ltd. (supra) rules that the expression in respect of may be taken to mean for the provision of . Supreme Court in Vijay Chand Jain ruled that the expression in respect of admits of a wide connotation and has been used in the sense of being connected with . The Orissa, Madras, Patna, Allahabad and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account the scope of related taxable services such as site formation, CICS, ECIS or WCS as well as new services introduced by Finance Act, 2010, the Board issued a clarificatory Circular No. 123/5/2010-TRU dated 24.05.2010. In para 2 of the circular the scope of CICS and ECIS were clarified in clauses (i) and (ii). Clause (iii) in para 2 deals with WCS. Clause (iii) sets out the following clarification: (iii) Works Contract' incorporates the inclusions and exclusions of the aforementioned two taxable services (amongst others) and it is the nature of the contract (i.e. a contract wherein the transfer of property in goods involved is leviable to a tax as sale of goods) rather than the nature of activities undertaken, that distinguishes it from the previously stated taxable services. Thus, even in the case of 'works contract' if the nature of the activities is such that they are excluded from aforesaid two services then they would generally remain excluded from this taxable service as well. From this clarification, it follows that since construction of canals is for irrigation, water supply or pipelines/ conduits for lift irrigation, water supply or sewerage dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S, in pari materia . Construction of pipeline or conduit (otherwise than under a turnkey/EPC mode), when executed for Government/ Government undertakings for transmission of water or sewerage would be outside the ambit of levy of tax, in terms of the definition itself, since this would undisputedly fall within the ambit of sub-clause (b) of WCS. (r) What then could be the legislative intention in not excluding levy on construction of a pipeline or conduit when executed under a turnkey/ EPC mode. Revenue does not explain this incongruity while contending that works contract executed under turnkey/ EPC project mode even in respect of canals, pipelines conduits for Government/ Government undertakings is taxable even if for non commercial, non industrial purposes! (s) In Radius Corporation Ltd. vs. CCE, Raipur 2014 (33) STR 416 (Tri. Del.); the issue was whether pre-construction work undertaken by an assessee like levelling of ground, construction of culverts, earthen bunds, stone pitching of reservoir bund, construction of pumping station, staff quarters and the activities are covered under the definition of CICS or under site formation and clearance, excavation earthmoving de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 19.12.2011 clarified that telecommunication service provided by a foreign telecom service provider could not be taxed under BAS. The Tribunal in Infosys Limited vs. CST, Bangalore - 2014-TIOL-409-CESTAT-BANG; also ruled that service provided by a foreign telecom service provider cannot be classified under BAS. (u) In the several appeals before us proceedings were initiated on the basis that contracts awarded to appellants are Engineering Procurement and Construction and Commissioning (EPC)/ turnkey contracts. The expression EPC/ turnkey was used in the relevant contracts. Revenue assumed that EPC is a species of the genus turnkey . This assumption by Revenue is predicated on the basis of clause (e) in the definition of WCS, which reads: Turnkey projects including Engineering, Procurement and Construction or Commissioning (EPC) projects. Neither turnkey nor Engineering, Procurement and construction or Commissioning EPC is defined. We therefore refer to lexicographic assistance for definition of turnkey projects . i)Law Lexicon by P. Ramanatha Aiyar (2010: Lexis Nexis) Turnkey contract: A contract under which the contractor assumes responsibility to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der whether the word including employed in clause (e) under Explanation (ii) of the definition of WCS must be construed in an expansive or a restrictive sense. (i) The word includes is generally used in interpretation or definition provisions in order to enlarge the meaning of words or phrases occurring in the body of the provision. When so used these words or phrases ought to be construed as comprehending not only such things as they signify according to the natural import but those things as well which the interpretation clause declares that they shall include . (ii) However, the word includes is susceptible to another construction which is equally compelling. If the context of the Act indicates that it was not employed merely for the purpose of adding to the natural significance of the words or expressions defined, the word includes must be interpreted as indicating mean and include ; and in such a case the word indicates an exhaustive explanation of the meaning of the words and phrases in the provision which, for the purposes of the provision must invariably be attached to those words or phrases. Ordinarily includes indicates that what follows this word is com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to 'mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions . It must therefore be held that the manufacture of Mangalore pattern roofing tiles is outside the purview of entry 22. (emphasis added) (iv) The significance of the word includes was again considered in the context of Prize Chits and Money Circulation Schemes (Banning) Act, 1978, 1978, in Reserve Bank of India vs. Peerless General Finance and Investment Co. Ltd. and Ors . (1987) 1 SCC 424 The following passage in the judgment elucidates the different significations of includes , depending on the context of the provision in issue and the legislative intention of the relevant enactment read as a whole: 35. Much argument was advanced on the significance of the word 'includes' and what an inclusive definition implies. Both sides relied on Dilworth's case. Both sides read out the well known passage in that case where it was stated , The word include is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red whether includes could in certain contexts be a word of limitation. The Court explained: 69. It has also been held that the word 'includes' may in certain contexts be a word of limitation (South Gujarat Roofing Tiles Manufacturers v. MANU/SC/0314/1976 State of Gujarat): [1977) 1 SCR 878. In the context of Entry 62 of List II this would not mean that the word 'luxuries' would be restricted to entertainments, amusements, betting and gambling but would only emphasise the attribute which is common to the group. If luxuries is understood as meaning something which is purely for enjoyment and beyond the necessities of life, there can be no doubt that entertainments, amusements, betting and gambling would come within such understanding. Additionally, entertainments, amusements, betting and gambling are all activities. 'Luxuries' is also capable of meaning an activity and has primarily and traditionally been defined as such. It is only derivatively and recently used to connote an article of luxury. One can assume that the coupling of these taxes under one entry was not fortuitous but because of these common characteristics . 70. Where two or more words a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression must depend on the word and the context. The resort to the word includes often indicates intention of the Legislature that it wanted to give an expansive and enlarged meaning to such expression. Sometimes, however, the context may suggest that the word includes may have been designed to mean means . The setting, context and object of an enactment would provide sufficient guidance for interpretation of the word includes for the purposes of such enactment. (vii) The above exposition of the meaning of the words includes i.e. that it could have a restrictive connotation, was reiterated in CC, New Delhi vs. Caryaire Equipment India Pvt. Ltd. 2012 (278) ELT 30 (SC); (v) From the guidance provided by the above precedents and in view of the fact that in the commercial world and practice, in legal and technical Dictionaries, EPC contracts are synonymously known and referred to as turnkey contracts as well, we conclude that in clause (e) under Explanation (ii) of the definition of WCS, turnkey projects and EPC projects are employed to signify similar, not dissimilar transactions, to indicate contracts in which a builder agrees to execute the whole of the enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently, if an EPC/turnkey contract falls to be classified under clause (b) or (c), it cannot be contended that since only a part of the whole or a larger project is executed by a particular appellant, there is no liability to tax. (x) (i) Before recording our conclusions on these issues [Issues (B), (C) (D)], we advert to other contentions advanced by Shri V. Sreedharan. Counsel contends that the contracts in issue are single, indivisible agreements whereby the transfer of property in goods involved in the execution thereof does not pass to the employer as soon as goods are brought to the site by the contractor. The transfer property in the goods takes place only when these are incorporated into the construction and get transformed as immovable property i.e. the property in the goods involved passes by accretion. In this class of works contract there is neither a separate agreement for the sale of goods involved in the execution of the works nor does the transfer of property in such goods takes place prior to the construction. The transfer takes place only at the time of construction by incorporation and as and when immovable property is constructed. On the basis of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger res-integra . It stands concluded by the decision in Larsen Toubro Limited vs State of Karnataka (2014) 1 SCC. 708. (vi) One of the issues considered by the Supreme Court in the above decision was whether an agreement for sale of a constructed building preceded by the construction thereof is an agreement to transfer the immovable property as an indivisible whole, by execution of a conveyance or whether there is in such a transaction a works contract as well. The Court summarised the legal position (to the extent relevant for our purposes), as under: (i) For sustaining the levy of tax on the goods deemed to have been sold in execution of a works contract, three conditions must be fulfilled: (one) there must be a works contract, (two) the goods should have been involved in the execution of a works contract and (three) the property in those goods must be transferred to a third party either as goods or in some other form. (ii) For the purposes of article 366 (29A)(b), in a building contract or any contract to do construction, if the developer has received or is entitled to receive valuable consideration, the above three things are fully met. It is so because in the perfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is what the definition of WCS clearly enacts. On the above analyses, contentions of Shir Shreedharan do not commend acceptance. We reject the same. We hold that even in works contract where the transfer of property in goods involved in the construction of a building or civil structure passes by accretion, the transaction is exigible to service tax under Section 65(105)(zzzza). 19. On the aforesaid analyses we hold [on issues (A), (B) (C)] that construction of canals under a dam for transmission of water or sewerage; or construction of pipelines or conduits for conveyance of water for irrigation, domestic consumption or sewerage disposal even where executed as turnkey/ EPC contracts; (i) would be classifiable under clause (b), Explanation (ii) of Section 65(105) (zzzza); (ii) construction of canals, pipelines or conduits for Government/ Government undertakings for augmentation of irrigation, water supply or sewerage disposal would be for a non-commercial, non-industrial purpose or user and thus excluded in view of the exclusionary clause in clause (b) of WCS definition; and (iii) construction of canals, pipelines or conduits for transmission of water including by lift ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes that the taxable event is the transfer of property in goods involved in such goods takes place when the goods are incorporated in the works, the value of the goods which constitutes the measure for the levy of the tax is the value of the goods at the time of the incorporation of the goods in the works. What is stated hereinabove also finds place in Rule 17(1)(a) of the APVAT Rules, 2005, quoted hereinabove. It is important to note that each of the sub- contractors of L T is registered dealer. None of them are unregistered. Under section 4(7)(a) read with rule 17(1)(c), quoted above, where a VAT dealer awards any part of the contract to a sub-contractor, such sub-contractor shall issue a tax invoice to the contractor for the value of the goods at the time of incorporation in such sub-contract. The tax charged in the tax invoice issued by the sub-contractor shall be accounted by him in his returns. Therefore, the scheme indicates that there is a deemed sale by the dealer executing the work i.e., the sub-contractor. It is only the sub-contractor who effects transfer of property in goods as no goods vest in the respondent-company (contractor) so as to be subject-matter of a ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltiple transactions. This reasoning is also borne out by section 4(7) which refers to value of goods at the time of incorporation in the works executed. In our view, if the argument of the Department is to be accepted it would result in plurality of deemed sales which would be contrary to Article 366 (29)(b) of the Constitution as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the sale 2005 Act vulnerable to challenge as violative of articles 14, 19(1)(g) and 265 of the Constitution of India as held by the High Court in its impugned judgment . (emphasis added) The above authoritative ruling concludes the issue. Even where an appellant had entered into a turnkey/ EPC project agreement or other works contract but had sub-contracted the whole or part of the works awarded (under terms of the agreement which authorised such sub-contracting); and the incorporation of goods into the construction/ structures was by the sub-contractor and not by an appellant, there is no rendition of WCS by such appellant, which is taxable under Section 65(105)(zzzza). In Table (A) in para 10 (supra) we have set out particulars of appeals whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision; (ii) Turnkey/ EPC project contracts, enumerated in clause (e), Explanation (ii) in Section 65(105)(zzzza) of the Act is a descriptive and ex abundant cautela drafting methodology. In the light of the decision in Alstom Projects India Ltd ., fortified by the Special Bench decision (dated 19.03.2015) in Larsen Toubro Ltd. reference, a turnkey/ EPC contract is taxable prior to 01.06.2007 as well. On and since 01.06.2007, turnkey/ EPC contracts must be classified on the basis of the essential character of the service provided thereby, with the aid of classification guidelines set out in Section 65A(2) of the Act. Consequently, a turnkey/ EPC contract must be classified under any of the clauses (a) to (d), Explanation (ii), Section 65(105)(zzzza). The bundled bouquet of services provided as turnkey/ EPC contract, classifiable as Commercial or Industrial Construction Service (CICS) prior to 01.06.2007, would be classifiable under clause (b), Explanation (ii), Section 65(105)(zzzza) on and from 01.06.2007 and would not be exigible to service tax if the rendition of service thereby is primarily for non-commercial, non industrial purpose, in view of the exclusionary cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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