2018 (2) TMI 1119 - AT - Service Tax

Levy of service - works contract service - execute turnkey contracts for supply, erection, installation and commissioning of power transmission and distribution systems - Held that - this issue is no more res integra and has been settled by the Hon ble Supreme Court in the case of L&T Ltd. 2015 (8) TMI 749 - SUPREME COURT wherein the Hon ble apex court has held that prior to 01/062007, there was no charging section to specifically levy service tax on WCS, or mechanism to tax service tax element derived from gross amount charged for works contract less value of the property in goods transferred in execution of works contract. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Appeal against impugned orders dated 22/03/2007 and 24/05/2007
- Identical issue in four appeals taken up together
- Department's appeal to enhance penalty in one case
- Whether service tax can be levied on indivisible Works Contract Service (WCS) prior to 01/06/2007
- Sustainability of impugned orders passed by the Commissioner
- Interpretation of law laid down by the Hon'ble Supreme Court
- Applicability of charging section for service tax on WCS pre-01/06/2007
- Justification for demand of service tax under erection, commissioning, and installation service
- Consideration of composite contracts and turnkey projects
- Application of extended period under Section 73 of the Act

Analysis:

The judgment by the Appellate Tribunal CESTAT, Bangalore involved multiple appeals against impugned orders dated 22/03/2007 and 24/05/2007, addressing identical issues collectively. The Department also filed an appeal to enhance the penalty in one case. The central question revolved around whether service tax could be imposed on indivisible Works Contract Service (WCS) before 01/06/2007. The appellant contended that the law laid down by the Hon'ble Supreme Court in previous cases, including Larsen & Toubro Ltd., established that prior to 01/06/2007, service tax could only be levied on service contracts simpliciter, not on composite indivisible works contracts.

The appellant argued that their activities fell under composite individual WCS, which was brought into the tax net only from 01/06/2007 under the category of WCS. They emphasized that the intention in such projects was towards the project as a whole, with all activities like supply, erection, installation, and commissioning carried out by the same party. The appellant cited legal precedents and circulars to support their position, highlighting that services introduced through new service definitions were not taxable under earlier services.

The Tribunal, after considering submissions and legal references, concluded that the issue had been settled by the Hon'ble Supreme Court in the case of Larsen & Toubro Ltd. The Tribunal noted that prior to 01/06/2007, there was no specific provision to levy service tax on WCS, as highlighted in previous judgments. Referring to the appellant's own case and subsequent decisions, the Tribunal found that the impugned orders were not sustainable in law. Consequently, the Tribunal set aside the impugned orders in all three appeals by allowing the appeals of the assessee, while dismissing the Department's appeal. The judgment provided consequential relief to the appellant, based on the established legal principles and interpretations.

This comprehensive analysis of the judgment showcases the detailed consideration of legal arguments, precedents, and statutory provisions by the Tribunal in resolving the issues raised in the appeals before them.