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Bharat Heavy Electricals Limited Versus Commissioner of Service Tax

2017 (11) TMI 941 - CESTAT CHENNAI

Valuation - Abatement - Erection, Commissioning or Installation Services - on-going contracts, at the time of introduction of new tax entry as "Works Contract Service' w.e.f. 1.6.2007 - Held that: - the tax liability of appellant for the period 1.6.2007 will not arise in case of works contract. For the period post-1.6.2007, necessarily the tax liability is determined belatedly under works contract service. Hence the question of option has no relevance as neither appellant nor the Revenue classif .....

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06/2016 - Final Order No. 42955-42958 / 2017 - Dated:- 17-11-2017 - Ms. Sulekha Beevi C.S. Member ( Judicial ) And Shri B. Ravichandran, Member ( Technical ) Shri G. Natarajan, Advocate For the Appellant Shri K. Veerabhadra Reddy, JC (AR) For the Respondent ORDER Per B. Ravichandran These four appeals are on common dispute regarding correct service tax liability of the appellant. 2. The brief facts of the case are that the appellants are engaged in construction, erection and commissioning of var .....

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industrial construction service. For erection and commissioning of various structures and machinery, they have discharged service tax under erection and commissioning or installation services on full value. They have availed cenvat credit on the input services and capital goods with reference to this tax liability. The Revenue contended that the appellants are liable to discharge service tax on the gross value of all these contracts categorizing the same under "Erection, Commissioning or In .....

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contracts discharged service tax liability as per their understanding. Wherever they could identify the construction activity separately, they discharged tax under construction service after abatement. For erection, commissioning they have discharged tax on full gross value without any concession. (b) The position regarding composite works contract with reference to service tax liability has been settled by the Hon'ble Supreme Court in the case of CCE & CC Kerala Vs Larsen & Toubro .....

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heme as per 2007 Rules. (d) The composition scheme for the works contract service liable to tax w.e.f 1.6.2007 cannot be denied to them as they have fulfilled the required condition as per 2007 Rules. Though they have discharged service tax under different tax entry, the tax liability when reworked as per the decision in L&T (supra), it will be clear that they have discharged more than the statutory liability. (e) He contested the imposition of penalties on the appellant on the ground that t .....

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confirming the tax liability under such category. (b) Regarding claim of the appellant either for abatement under construction service or for composition under works contract service, it is submitted that they are not eligible for either of them. When the contract is composite, abatement cannot be allowed for construction service when cenvat credit is availed on input services. Similarly, the composition rate for works contract is applicable only when due option as per Rule 3 of 2007 Rules is ex .....

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es it clear that there can be no service tax liability on the appellant for such composite works contract prior to 1.6.2007. 6. The appellants themselves in respect of the contracts discharged service tax by splitting them into construction based on rate schedule for construction activity and erection activities separately. This was objected to by Revenue. We note that the contracts executed are for a purpose of power generation units. However, in respect of at least a few of the contracts, ther .....

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tion is not sustainable. 7. The central point of dispute has to be resolved only with reference to the nature of the contracts for the purpose of liability. It is to be categorically established that a particular contract involves supply of material as well as provision of service clearly attracting a tax entry "Works Contract Service". As noted above, the appellant themselves had followed the different classification apparently on the basis of separate agreements though for overall sa .....

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he next point will be whether or not the appellant shall be eligible for composition scheme for such works contract. We hold that in case contracts are held to be works contracts, then necessarily the application of composition scheme to such contracts cannot be denied only on the ground that there was no option exercised during the material time. 9. With reference to the reliance placed by Revenue on Nagarjuna Constn. Co. Ltd. (supra), we find that the facts of the present case are on a differe .....

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