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2015 (10) TMI 1302 - CESTAT MUMBAI

2015 (10) TMI 1302 - CESTAT MUMBAI - TMI - Refund of Service Tax on works contract prior to 1-6-2007 Appellants have discharged the liability by mistake Refund claim rejected by Revenue on the grounds that the works contract awarded to first appellant is divisible one Held That:- Service tax liability on works contract cannot be imposed prior to 1.6.2007 by vivisecting the contract and taxing individually the services Appeals allowed and impugned order set aside Decision made in case o .....

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e disposed of by a common order as the issue involved is the same. 2. Relevant facts that arise for consideration of M/s Uhde India Ltd. the appellant no. (1) are engaged in rendering services under the category of Consulting India Services, M/s Rashtriya Chemicals & Fertilizers Ltd. is the appellant no. (2) are engaged to manufacturing of fertilizers. Appellant no. (2) had awarded two lump-sum turn key projects (LSTK) contract for setting up a Nitric Acid plant to appellant no. (1) which wa .....

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ility; both the appellants had filed the refund claim which are not overlapping the adjudicating authority as well as the first appellate authority rejected the contentions raised by the appellants that the services received and rendered by them do not fall under the category of service which are to be taxed in as much, the contract upheld to appellant no. 1 was works contract coming on a such conclusion, both the lower authorities rejected the refund claim. 3. Learned counsel would take through .....

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t in the recent judgment in the case of Larsen and Tourbo Ltd. & others as reported at 2015-TIOL-187-SC-ST has clearly settled a law holding that Composite Works Contract cannot be vivisected to tax under any heading prior to 1.6.2007. He reads the specific paragraphs. 4. Learned departmental representative on the other hand submits that the judgment of Hon ble SC is in respect of the works contract executed which are indivisible in nature; he would submit that in the case is in hand, the W .....

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ant for appellant no. 2. It is also undisputed that the technology up gradation of H.P. Nitric Acid Plant is a lump-sum contract for 66,87,10,000 Rupees. The price schedule in the said contract indicates the amount to be paid is the contracted price, to be paid by appellant No. 2 in consideration of contracted performance of the work covered under the said work order, which included license and know how, basic design and engineering, detailed engineering, procurement, supply, fabrication, transp .....

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s contract. It is also noted from paragraph no 17 of the impugned order that appellant no. 1 had discharged appropriate works contract tax to state government authorities. We find that appellant had make out a case in their favor on to that the service tax liability on the works contract will be applicable only from 1/06/2007. This view is fortified by the Apex Courts in judgment in the case Larsen and Tourbo Ltd and others (supra). With respect, we reproduce the relevant paragraphs of the rati .....

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under sub-paras (f), (g) and (h). Under each of these paras, a bifurcation has to be made by the charging Section itself so that the cost of establishment of the contractor is bifurcated into what is relatable to supply of labour and services. Similarly, all other expenses have also to be bifurcated insofar as they are relatable to supply of labour and services, and the same goes for the profit that is earned by the contractor. These deductions are ordinarily to be made from the contractor's .....

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ion, the charge to tax that would be made would otherwise contain, apart from other things, the entire cost of establishment, other expenses, and profit earned by the contractor and would transgress into forbidden territory namely into such portion of such cost, expenses and profit as would be attributable in the works contract to the transfer of property in goods in such contract. This being the case, we feel that the learned counsel for the assessees are on firm ground when they state that the .....

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ds in Section 65(105) noticed above would only be of service contracts simpliciter and not composite indivisible works contracts. 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services re .....

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