2015 (12) TMI 1669 - AT - Service Tax

Works contract - composite turnkey contract - work executed by the appellant in favour of DMRC amounts to a composite indivisible works contract but was erroneously classified by Revenue as ECIS during the period upto 01.06.2007 - Held that - the preambular portion of the definition of works contracts excludes works contract provided in respect of railways from the scope of definition of the taxable service, during relevant period - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Stay application and waiver of pre-deposit.
2. Classification of services under a composite turnkey contract.
3. Taxability of works contracts under different provisions.
4. Exclusion of works contracts provided in respect of railways from the taxable service definition.

Stay Application and Waiver of Pre-deposit:
The Tribunal heard the appellant's counsel and the Revenue's representative during the stay application. Since the issue favored the assessee based on previous decisions, the Tribunal waived the pre-deposit and decided to dispose of the appeal with the agreement of both parties.

Classification of Services under a Composite Turnkey Contract:
The appeal was filed against an adjudication order confirming a service tax demand. The appellant, a joint venture, provided erection, commission, or installation services under a composite turnkey contract for the Delhi Metro Rail Corporation (DMRC) during a specific period. The work executed by the appellant for DMRC constituted a composite indivisible works contract, erroneously classified by the Revenue. The Tribunal referred to a decision stating that works contracts were not taxable under certain provisions before a specified date. Post that date, works contracts became taxable under a different section. Notably, the definition of works contracts excluded those provided in respect of railways from the taxable service scope.

Taxability of Works Contracts under Different Provisions:
The Tribunal found the impugned order unsustainable and quashed it without imposing costs. The decision was based on the understanding that the appellant's services fell under a composite indivisible works contract, wrongly classified by the Revenue. The Tribunal referred to specific legal provisions and previous judgments to support its conclusion on the taxability of works contracts under different sections.

Exclusion of Works Contracts Provided in Respect of Railways from Taxable Service Definition:
The Tribunal emphasized that works contracts provided in respect of railways were excluded from the definition of taxable service. This exclusion played a crucial role in the Tribunal's decision to quash the impugned order. The judgment highlighted the specific nature of the services provided by the appellant in the context of the exclusion related to works contracts concerning railways.