2021 (11) TMI 836 - AT - Service Tax

Works Contract Services - Composite Contract - Commissioning or Installation of Plant Machinery and Equipment Service - Repair and Maintenance Service - period involved in the matter is 2004-05 to 2008-09 - HELD THAT - During the course of adjudication, all the 97 work contracts have not been examined in detail by the Adjudicating Authority and merely on the basis of sample contracts, the demand of service tax was confirmed. It is also a fact on record that for the contracts mentioned at Serial No. 1, 2, 4, 5, 34, 37, 39, 40, 58, 73, 94 to 97 at Annexure D , there is categorical finding of the Adjudicating Authority that these are the turnkey projects. Thus, where there is turnkey projects, the services were rendered along with supply of materials i.e. in the nature of Works Contract service and for that the proper classification is Works Contract service but for the rest of the Contracts no examination in detail with nature of work was done by the adjudicating authority to say whether any supplies are inclusive of the work contract or not? The matter remanded to the Adjudicating Authority to examine each and every contract in detail to ascertain the fact whether services have been provided along with material and it is a composite contract - appeal is disposed of by way of remand.

Summary

Issues:
Confirmation of demand of Service Tax under Commissioning of Plant and Machinery Equipment service and Maintenance and Repair service.

Analysis:
The appellant filed an appeal against the confirmation of demand of Service Tax under two categories of services along with interest and penalties imposed. The appellant, a service provider registered under Maintenance and Repair services, was found to be engaged in providing services related to setting up pumping stations and maintenance of Tube well for various entities with an annual turnover exceeding Rs. Two Crores. The contracts examined revealed turnkey projects involving supply, installation, testing, and commissioning of equipment at various sites. A show cause notice was issued demanding service tax under Commissioning or Installation of Plant Machinery and Equipment Service and Repair and Maintenance Service. The demand was confirmed with interest and penalties. The appellant contended that the services provided were in the nature of works contract falling under Works Contract service effective from 01.06.2007, citing relevant legal precedents. The Authorized Representative supported the impugned order.

Upon hearing both parties, the Tribunal noted that not all 97 work contracts were examined in detail during adjudication, and the demand was confirmed based on sample contracts. It was observed that for specific contracts identified as turnkey projects, the services were rendered along with material supply, qualifying as Works Contract service. However, a detailed examination of all contracts was necessary to determine if they were composite contracts involving both services and material supply. Therefore, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a thorough examination of each contract to ascertain whether they constituted Works Contract service. The appellant was directed to cooperate by providing relevant documents for consideration.

As a result, the appeal was disposed of by way of remand, emphasizing the need for a detailed analysis of each contract to determine the appropriate classification of services provided by the appellant.