TMI Blog2018 (6) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/2010-ST dated 20.7.2010 - Held that:- This exemption appears to be for all taxable services relating to transmission of electricity. Whether the activities performed by the appellant are in relation to the transmission of power? - Held that:- erection commissioning and installation comes within the ambit of the expression ‘in relation to’ - the activity undertaken by the appellants are to be held to fall in the ambit of ‘in relation to’ transmission of electricity in terms of Notification No.45/2010 dated 20.7.2010 as there is a clear nexus between the service rendered by the appellant and transmission and distribution of electricity - the exemption contained in the said Notification is squarely applicable to the appellants. Whether the appellants have correctly availed the Notification? - Held that:- The liability of duty itself is not surviving in view of the exemption Notification No.45/2010 dated 20.7.2010, these issues do not require any consideration at this juncture. Appeal allowed - decided in favor of appellant. - ST/281/2009-DB - Final Order No. 20815 /2018 - Dated:- 13-6-2018 - Shri S. S. Garg, Judicial Member Hon'ble Shri P. Anjani Kumar, Judicial Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k ups for supply portion and erection, commissioning and installation portion are available or the contracts are separately given for supply portion and erection, commissioning portion, the contracts are composite in nature and on single responsibility basis; the same has been noted in the show cause notice (Para 10.5) and in the impugned order (paras 54, 63 and 66 refers). 2.1. The appellants submitted that the contracts are awarded on turnkey basis, where the responsibility of the appellant does not stop merely with supply of goods but on complete responsibility basis and contracts in question have to be looked into as a single / composite contract; the manufacture and supply of ACSR conductors are subject to levy of excise duty and VAT; appellant has discharged appropriate excise duty and VAT on the sale of such goods. Due to the confusion prevalent as to the applicability of service tax, the appellant had followed different practices during the relevant time. 2.2. The appellant submitted that the concerned persons dealing with the service tax matters in the appellant company entertained a belief that they would be liable to pay service tax from 10.09.2004 and in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 (4) GSTL 412 Tri-Chan. Though, it is an admitted fact that the contracts in this case are composite contracts, in view of the ratio of CCE vs. Hindustan Construction Company 2017-TIOL-104 Mad HC and Suzlon Infrastructure Ltd. vs. State of Karnataka 2015- TIOL-796 HC-Kar. even when the supply and service portion are awarded through separate contracts, it would constitute a works contract. 2.4. In view of the above, the demand of service tax under erection, commissioning and installation service for the period from 01.07.2003 to 3103.2007 is not at all sustainable and liable to be set aside with consequential relief. Having concluded that the contracts in question are composite in nature in the SCN as well as in the OIO; having demanded and confirmed service tax on the total value including the value of supply and value of erection, commissioning, after granting 67 % abatement, by treating the supply contract and erection contracts together as single contracts, the department cannot now be permitted to argue that the ratio laid down by the Hon ble Supreme Court in L T Ltd. supra is not applicable in this case, as the contracts are divisible / not composite in this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvanchal Vidyut Vitran Nigam Ltd reported in 2013 (30) STR 259 (Tri-Del) Paschimancal Vidyut Vitran Nigam Ltd reported in 2012 (28) STR 412 (Tri-Del) N. Srinivasula Reddy Vs CCE 2017 (4) GSTL 26 Tri-Hyd. Kedar Constructions Vs CCE 2015 (37) STR 631 Tri-Mum 4. Without prejudice to the above, the appellant submits that CBEC vide Circular No.123/5/2010 TRU dated 24.05.2010 examined the taxability of various activities under the category of erection, commissioning and installation services. At the outset the appellant wish to submit that the above circular was before the decision of the Hon ble Supreme Court in L T supra and hence to the extent it seeks to impose the levy on composite contracts, is not sustainable. Further, the above circular is also before the issue Notification No.45/2010 dt. 20.07.2010. Despite the above, the appellant wish to submit that as per this circular, many of the activities undertaken by the appellant would not be liable to service tax. 5. Further, the appellant also made an alternative claim before the Commissioner that as per Notification No.12/2003 the value of transfer of property in goods is exempted from payment of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on the value of services covered in the contracts after claiming an abatement of 67% on the value of services. The learned special counsel further submits that the dates of invoices were manipulated by them to show that the services were rendered before 10/9/2004 and the same was explained away as the mischief of an employee. 7.1. In the instant case, the subject 'Erection, Commissioning or installation' contracts were essentially service contracts; as may be seen from the contracts and the replies to the SCN (Para 10.1) there is a clear bifurcation of value of each item of supply and erection and commissioning services. The contract itself is clearly divisible. Hence, they are covered under Commissioning or installation' and/or 'Erection, Commissioning or installation' before 1/6/2007 was correct. Drawing Reference to Paras 15, 17 and 41 of the Apex court's judgment in the case of CCE, Kerala vs. Larsen and Toubro Ltd. [2015 (39) STR 913 (SC)], the Learned Counsel distinguished the judgment of the Apex Court, saying that Hon ble Supreme Court held that subjecting the value of services to S Tax is not permissible in the case of a composite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax is based on the value of any taxable service i.e. the gross amount charged by the service provider for such services provided. The appellant has availed of the benefit of Notification No.19/03, as amended by Notification No. 1/06, and hence, the demand is quantified in the 010 at Para 14.2 [Pages 53 and 54 of Vol.1] taking the full value of Gross income as reflected in the Books of Account of the Appellant. The quantification of demand in terms of the Apex Court's judgment would require some modification which could be ordered by the Hon'ble Bench. 8. We have given careful consideration to the submissions on both sides and have perused the records of the case. The brief points for consideration before us in the instant case are: (i). Whether the activity undertaken by the appellant can be treated as composite and indivisible contract so as to be covered by the Hon ble Supreme Court s decision in the case of CCE, Kerala vs. Larsen and Toubro Ltd. [2015 (39) STR 913 (SC)] (ii). Whether there is nexus between services rendered by appellant and transmission and distribution of electricity activity undertaken by the appellant so as to make them eligible for exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Imagic Creative Pvt. Ltd. (supra), wherein it was held that a distinction should be borne in mind between an individual contract and a composite contract. 8.3. In the instant case, contracts are of three types. Either for supply, civil works or erection or a combination of these but they are total contracts. The common items mentioned in all the contracts are erection, commissioning and installation; therefore, the contracts are to be considered as composite contracts and are on turnkey basis. Therefore, it can be argued that the contracts and the services rendered there upon are beyond the scope of levy of service tax. On a perusal of contract dated 20.7.2005 given by Karnataka Power Transmission Ltd. to the appellants, we find at page 94 Vol. IV of the paper-book, the contract in respect of rearrangement of Hubli Bagalkot 110KV DC Line to link proposed 220KV receiving station Bagalkot is mentioned to be on turnkey basis. Similarly at page 102 of the Vol. IV of paper-book, contract in respect of construction of 66KV DC Line from H.N. Pura to SRS Hootagally is mentioned to be on turnkey basis but it has a portion containing supply of materials also. In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioning is in relation to creation of infrastructure, it cannot be strictly construed to be in relation to transmission of power so as to make this exemption eligible. However, on this count we find plethora of judgments, wherein it has been held that erection commissioning and installation comes within the ambit of the expression in relation to . CCE vs. Sri Rajyalakshmi Cement Products: 2017 (52) STR 309 (Tri.-Hyd.) Hyderabad Power Installations (P) Ltd. vs. CCE: 2016 (45) STR 217 (Tri.-Hyd.) U.P. Rajkiya Nirman Nigam Ltd. vs. CCE: 2016 (41) STR 967 (Tri.-Del.) Shri Ganesh Enterprises vs. CCE: 2014 (35) STR 348 (Tri.- Bang.) Noida Power Co. Ltd. vs. CCE: 2014 (33) STR 383 (Tri.-Del.) Purvanchal Vidyut Vitran Nigam Ltd. vs. CCE: 2013 (30) STR 259 (Tri.-Del.) Therefore, we are not inclined to accept the contention of the Special Counsel on the point that the activities of the appellants are for creation of infrastructure. Going by the ratio of the above judgments cited supra, the activity undertaken by the appellants are to be held to fall in the ambit of in relation to transmission of electricity in terms of Notification No.45/2010 da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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