2016 (10) TMI 915 - AT - Service Tax

Classification of services - composite services - activities connected with power distribution such as setting up of sub-stations including transformers and other electrical equipments, civil construction work, etc. - classified under Erection, Commissioning or Installation Services or under Works Contract service - N/N.45/2010-ST, dated 20.07.2010 - reference made to the decision of the case CCE, Kerala Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT and arguement placed that orders executed by them would not be leviable to service tax for the period upto 31.05.2007. Held that - The apex court has categorically held that in respect of composite contract, these are to be necessarily classified under Works Contract services and such contracts are leviable when work contract services included in the statute book - various Work Contracts executed by the appellant will need to be examined individually to see whether they are in the nature of services relatable to transmission or distribution of electricity. Matter remanded to the original adjudicating authority to examine each work contract and record the finding and give the exemption benefit in respect of those instances except which are not covered by the Notification - appeal disposed off by way of remand.

Summary

Issues:
1. Classification of services rendered by the appellant under "Erection, Commissioning or Installation Services" (ECIS) for levying service tax.
2. Benefit of abatement for the value of goods supplied at the time of execution of work orders.
3. Applicability of Notification No.45/2010-ST for exemption related to transmission and distribution of electricity.
4. Nature of services rendered by the appellant in relation to transmission or distribution of electricity.
5. Classification of work contracts as Works Contract services.

Analysis:
1. The appeals challenged the Order-in-Original by CCE, New Delhi, finalizing demands raised under two Show Cause Notices regarding services provided by the appellant. The impugned order upheld the demands under "Erection, Commissioning or Installation Services" without extending the benefit of abatement for goods supplied.

2. The appellant contended that the services rendered involved both supply of goods and service, citing the decision of the Supreme Court in CCE, Kerala Vs. Larsen & Toubro Ltd. The appellant argued for non-leviability of service tax until 31.05.2007 and classification as Works Contract service from 01.06.2007.

3. The appellant relied on Notification No.45/2010-ST for exemption on services related to transmission and distribution of electricity. The appellant claimed that their work orders were covered under this retrospective Notification, seeking to establish the demands based on this exemption.

4. The Departmental Representative raised concerns over the nature of services provided by the appellant, suggesting a need to verify if they indeed related to transmission or distribution of electricity. Some work orders were identified as potentially not falling under these categories, proposing a remand to the original adjudicating authority for detailed examination.

5. The Tribunal noted that many work orders involved setting up sub-stations, likely pertaining to transmission or distribution of electricity, eligible for exemption under Notification No.45/2010-ST. The Tribunal directed a remand to the original authority to individually assess each work contract, considering the apex court decision in CCE, Kerala Vs. Larsen & Toubro Ltd., and grant exemption where applicable within three months from the order receipt. The appellant was instructed to cooperate for timely verification.