2008 (4) TMI 104 - AT - Service Tax

Consulting engineer service - Services relating to design engineering supply supervision and commissioning of lime stone crushing plant under - composite contract - every contract has to be seen on merits to see whether it is one for supply of goods or for rendering of services or both - held that in respect of two of the contracts the Service tax was not attracted - appellant has not made out a prima-facie strong case for full waiver so we direct the applicant to deposit 50% of duty

Summary

Issues:
Interpretation of service tax liability on contracts with different entities.

Analysis:
The case involved a dispute regarding the imposition of service tax on contracts entered into by the appellant with various entities. The Department issued a show cause notice proposing a substantial demand for service tax under different heads for a specified period. The Commissioner examined each contract separately to determine the applicability of service tax. The Commissioner held that the contracts with Indian Railways and M/s. Northern Coal Fields Limited did not amount to the rendering of services and hence, the demand was deemed unsustainable. However, in the case of the contract with M/s. Vikram Cement Limited, the Commissioner concluded that the contract involved services like design, engineering, supply, supervision, and commissioning, making it liable for service tax. The Commissioner confirmed a significant demand along with penalties for this particular contract.

The appellant contested the imposition of duty and penalties specifically in relation to the contract with M/s. Vikram Cement Limited. The appellant relied on various legal decisions to support their case. The Tribunal carefully considered the arguments presented by both sides. The Tribunal noted that the judgments cited by the appellant had been analyzed by the Commissioner and distinguished in her order. The Tribunal found merit in the Commissioner's findings and reasoning. The Tribunal emphasized the need to assess each contract on its own merits to determine whether it primarily involved the supply of goods, rendering of services, or a combination of both. In this case, the Tribunal concurred with the Commissioner's assessment that the contract with M/s. Vikram Cement Limited attracted service tax based on the nature of services provided.

Ultimately, the Tribunal held that the appellant had not established a strong prima facie case for a full waiver of duty. As a result, the Tribunal directed the appellant to deposit 50% of the duty within a specified timeline, with the remaining amount and penalties being waived subject to compliance with the directive. The Tribunal stressed the importance of evaluating each contract independently and upheld the Commissioner's decision regarding the liability for service tax in the case of the contract with M/s. Vikram Cement Limited.

In conclusion, the Tribunal's judgment clarified the criteria for determining service tax liability on contracts involving the supply of goods and services. The decision underscored the significance of assessing each contract on its individual merits to ascertain the applicability of service tax, emphasizing the specific nature of services provided under each contract.