2008 (11) TMI 199 - AT - Service Tax

Commissioning and Installation services - Maintenance and Repair services - right from the beginning the appellants have been claiming that the contract entered into by them with their customers was composite contract which could not be subjected to vivisection and that, therefore, they were not liable to pay tax and the fact of payment of service tax by them should not be held against them to hold that there was liability to pay such tax Held that - hold that the contract being a composite one, it is not capable of being vivisected and a part thereof subjected to service tax levy Demand of service tax and penalty set aside.

Summary

Issues:
1. Liability to pay service tax for commissioning and installation services.
2. Applicability of Notification No.12/2003-ST.
3. Classification of the contract as composite or not.

Analysis:
1. The appellants, engaged in manufacturing lifts and elevators, were registered for payment of Central Excise Duty and Service Tax for commissioning, installation, maintenance, and repair services. The dispute arose when the Asstt. Commissioner finalized a provisional assessment for commissioning and installation services, adjusting the excess amount towards the liability for maintenance and repair services. The Commissioner of Service Tax later demanded differential service tax, arguing the appellants were not entitled to a notification benefit due to not fulfilling specific conditions. The appellants contended that their contracts were composite and should not be vivisected for tax purposes. The Tribunal noted the absence of a finding against the appellants' claim and highlighted a similar case where proceedings were dropped, emphasizing the composite nature of the contract.

2. The Tribunal examined the terms and conditions of the contract and determined it to be composite, in line with previous judgments on such contracts. Referring to precedents like Daelim Industrial Co. Ltd v. CCE, Diebold Systems (P.) Ltd v. CST, and Kirlbum Engg. Ltd. v. CCE, the Tribunal held that composite contracts are not subject to vivisection and partial service tax levy. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each aspect of the case.