2017 (5) TMI 1088 - AT - Service Tax

Composite works contract - Consulting engineering service - erection, commissioning and installation service - tax liability for the period 01/01/2007 to 31/03/2011 - Held that - For the period post 01/06/2007, the tax entry works contract service excluded the services of works contract in respect of railways. DMRC Metro Rail Project is covered by the scope of the term railways - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability under "consulting engineering service" and "erection, commissioning and installation service" for the period 01/01/2007 to 31/03/2011.

Analysis:
The appellant entered into a contractual arrangement with M/s Delhi Metro Rail Corporation (DMRC) for various services related to train control, signalling, and telecommunication systems. The dispute centered around the service tax liability of the appellant for the mentioned period, based on three show cause notices. The Commissioner confirmed a service tax liability of &8377; 1,98,27,288/- and imposed penalties under Section 76 and 78 of the Finance Act, 1994.

The appellant argued that their service tax liability should be considered under a single composite works contract, as previously decided by the Tribunal in a similar case involving contracts for providing services to DMRC. The Tribunal's decision highlighted that contracts for services of erection, installation, and supply of materials to DMRC were composite in nature and not subject to service tax liability before 1.6.2007. Post this date, the exclusion of services rendered to railways, including DMRC, from the scope of service tax liability under "Works Contract Service" was established.

Regarding the period prior to 01/06/2007, the Tribunal followed the ratio laid down by the Hon'ble Supreme Court in a specific case. For the period post 01/06/2007, the tax entry "works contract service" excluded services related to railways, which included the DMRC Metro Rail Project. The Tribunal emphasized that the impugned order could not be sustained based on the settled legal position and set it aside, allowing the appeal.

The Tribunal noted that the reliance placed on a previous decision by the Original Authority was no longer valid as it had been reversed by the Hon'ble Supreme Court in a different case. Therefore, the impugned order confirming the service tax liability and imposing penalties could not be upheld, leading to the appeal being allowed.

In conclusion, the Tribunal's detailed analysis and application of legal principles, including precedents set by higher courts, resulted in the setting aside of the Commissioner's order regarding the service tax liability of the appellant for the specified period.