2023 (3) TMI 1275 - AT - Service Tax

Classification of services - services provided to DMRC with respect to Cost Centre A (Preliminaries and General Requirements) and Cost Centre B (Detailed Design) - classifiable under the taxable category of consulting engineer service or not - services provided by the appellant to DMRC with respect to Cost Centre D (Installation and Site Testing) and Cost Centre E (System Acceptance Test and Integrated Testing Commissioning) - classifiable under the taxable category of erection, commissioning or installation services or not - Non-payment of Service Tax - HELD THAT - It is seen that for the period prior to 01.07.12, the service provided by the appellant would be covered within the exclusion clause of the definition of works contract service since the service provided by the appellant to DMRC is with respect to metro (which is covered within the purview of Railways). This issue was also decided in favour of the appellant in CCE, JAIPUR-I VERSUS M.M. CONSTRUCTIONS, KIRAN UDYOG (KIRAN INFRA ENGS. LTD.) AND KIRAN INFRA ENGGS., M.M. CONSTRUCTIONS, ALCATEL PORTUGAL S.S. (NOW KNOWN AS THALES PORTUGAL SA) VERSUS CCE, JAIPUR/DELHI 2017 (1) TMI 1385 - CESTAT, NEW DELHI where it was held that works contract service provided to Indian Railways as well as DMRC are excluded for tax liability. For the period post 30.06.2012, the service rendered by the appellant would be covered under Serial No. 14 of the Exemption Notification dated 20.06.2012 - It is, therefore, clear that services provided by way of erection, commissioning and installation of machinery or equipment to DMRC by the appellant is covered under Serial No. 14 of the Notification dated 20.06.2012 and thus, would be exempt from payment of service tax w.e.f. 01.07.2012. It is not possible to sustain the order dated 24.10.2016 passed by the Commissioner (Appeals) - Appeal allowed - decided in favour of appellant.

Summary

Issues involved:
The issues involved in this case include classification of services provided by the appellant to DMRC under consulting engineer service and erection, commissioning or installation services, and the applicability of service tax on the said services.

Classification of services:
The appellant, a part of a consortium executing a contract with DMRC, claimed that the contract was a composite works contract involving supply of goods and services. The investigation revealed failure to pay service tax, leading to show cause notices for consulting engineer services and erection, commissioning or installation services.

Appellant's arguments:
The appellant argued that the services should be classified under works contract service, taxable from 01.06.2007, and that demands post this date for consulting engineer service and erection, commissioning or installation service were not sustainable without being proposed under works contract service.

Legal precedent:
The appellant cited previous cases involving similar issues in their favor, highlighting that contracts for services provided to DMRC were composite in nature, with no tax liability prior to 01.06.2007 and exclusion from service tax liability post this date for works contract services related to railways.

Exemption notification:
For services rendered post 30.06.2012, the appellant's services were covered under Serial No. 14 of an exemption notification, pertaining to construction, erection, commissioning, or installation of original works related to railways, leading to exemption from service tax from 01.07.2012.

Decision:
The Tribunal set aside the order confirming service tax liability, noting that services provided by the appellant were covered under the exemption notification from 01.07.2012, and thus, not liable for service tax. The appeal was allowed based on the above reasons.