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2024 (6) TMI 959 - AT - Service TaxIssues Involved: 1. Inclusion of transport/insurance charges in the gross value of service for erection and installation of transmission towers. 2. Invocation of Section 66F of the Finance Act, 1994 for classification of bundled services. 3. Independent assessment of transportation and insurance services. 4. Application of the cross-fall breach clause. 5. Pre-SCN consultation requirement. 6. Adjudication within the stipulated period u/s 73(4B) of the Finance Act, 1994. 7. Reimbursement of expenses and its consideration for service tax. 8. Revenue neutrality of the transaction. 9. Invocation of the extended period of limitation. Summary: 1. Inclusion of Transport/Insurance Charges: The issue is whether the transport/insurance charges received by the appellant should be included in the gross value of the service of erection and installation of transmission towers. The tribunal found that the appellant had separate contracts for transportation/insurance and installation services, with distinct and independent activities. The payments and billing were done separately for each component, leading to the conclusion that these activities should not be treated as a single composite service. The tribunal cited the case of Jain Carrying Corporation v. CCE, where separate services under a composite contract were classified independently. 2. Invocation of Section 66F: The appellant argued that the department failed to reference Section 66F of the Finance Act, 1994, which deals with the bundling of services for classification purposes. The tribunal agreed that the services of transportation and insurance were distinct and completed before the installation services commenced, thus not deriving their essential character from the installation service. 3. Independent Assessment of Services: The tribunal observed that the service contract clearly bifurcated the charges for installation and transportation/insurance services. It emphasized that both activities were defined separately in the contract and should be assessed independently. The tribunal referenced the judgment in M/s Crompton Greaves Ltd., which supported the independent classification of services provided under separate contracts. 4. Cross-Fall Breach Clause: The appellant contended that the Ld. Commissioner unjustifiably relied on the cross-fall breach clause to conclude that the contract was a single indivisible works contract. The tribunal agreed that the clause should be read harmoniously with other contract clauses, and heavy reliance on it in isolation was unjustified. 5. Pre-SCN Consultation Requirement: The appellant argued that the department did not provide an opportunity for pre-SCN consultation, which is mandatory for demands above Rs. 50 lakhs. The tribunal did not address this issue directly as it decided the matter on merits and limitation. 6. Adjudication Period u/s 73(4B): The appellant argued that the adjudication was not completed within the stipulated period of one year from the date of the show cause notice. The tribunal did not specifically address this issue due to its decision on merits and limitation. 7. Reimbursement of Expenses: The appellant contended that the reimbursement for transportation and insurance services does not qualify as "consideration" for service tax. The tribunal found that the reimbursement of expenses incurred by the appellant should not be included in the value of services for service tax purposes. 8. Revenue Neutrality: The appellant argued that any service tax paid would have been available as credit to the customers, making the transaction revenue neutral. The tribunal acknowledged this argument but did not base its decision solely on this ground. 9. Extended Period of Limitation: The tribunal found that the invocation of the extended period of limitation was not justified. It noted that the appellant was a registered assessee and had regularly filed returns. The issue was related to the interpretation of valuation, and there was no suppression of facts or wilful misstatement. The tribunal referenced the decision in M/s. GD Goenka Pvt. Ltd. to support its view on the time bar. Conclusion: The tribunal set aside the impugned order, finding that the demand of service tax on transportation/insurance services was not sustainable on merits and was also time-barred. The appeals were allowed with consequential relief.
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