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TMI Blog2013 (12) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction contract. It is the case of the Revenue that both the contracts entered into by the appellant and the service recipient are artificially bifurcated and are required to be considered as one. Revenue in their cross-objection under ST/CO/10461 of 2013 mainly argued that explanation to Rule 3(1) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, substituted under Notification No. 23/2009-ST dated 07.7.2009, is not applicable to the applicants case and both contracts should be treated as one. 3. Learned advocates Shri V.K. Jain and Ms. Dimple Gohil appeared on behalf of the appellant and argued that both the contracts were executed on 24.08.2007. Learned Shri Jain (advocate) made us go through the supply contract dated 24.08.2007. He contended that as per the definition of agreement clause of Supply Contract, the balance of plant constitutes all such machinery, permanent plant and equipment, materials etc. other than the imported plant and equipment separately provided by the recipient of services. The balance of plant was required to be supplied by the appellant under the supply contract. On the other hand, appellant was required to provide ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the goods required for execution of works contract for working out service tax liability under the Composition Scheme by either excluding the value of goods received free of cost from their clients or splitting the contract into a sale contract (for a portion of goods required to execute the works contract) and works contract (only a portion of the total value of goods and the labour charges). It was emphasized that as per this clarification, in order to plug loopholes, explanation appearing in sub-Rule 3 (1) of The Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was introduced with effect from 07.7.2009 under Notification No. 23/2009-ST dated 07.07.2009. It was, therefore argued by him that both the contracts have been executed before 07.7.2009 and the said amendment will not be applicable to their case. It was also emphasized that there is no evidence on record to show that supply contract/ construction contract were entered after 07.7.2009 and were artificially bifurcated on an earlier date to claim lesser value for the purpose of service tax payment. 5. Shri K. Sivakumar, learned A.R. appearing on behalf of the Revenue argued that both the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efects or damage in the Facility (or any Unit thereof) or any Contractors Documents and any part thereof arising out of or in relation to the Works, during the Defects Notification Period or within 14 (fourteen) days after the expiration as a result of an inspection made by or on behalf of the Owner at any time or times prior to the expiration of the Defects Notification Period. 7. It is evident that clause 18.1 of the Supply Contract talks about remedy of defects or damage in the balance of plant. As per the definition of the supply contract, balance of plant includes all such machinery permanent plant, equipment, material etc. required for commissioning and maintenance of the balance of plant. On the other hand, 'defects liability' mentioned under clause 34 of the Construction Contract talks of the remedy of defects/ damages in the 'facility' or to any unit thereof. The word 'facility' is defined under the Construction Contract to mean a Thermal Power Project in relation to which the works are required to be carried out in accordance with the contract. The word 'defect' as per the definition clause means any defect, imperfection, deficiency or other fault in the facility or par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to the Owner upon Delivery by the Supplier of that item of the Balance of Plant at the Site and upon endorsement of the documents required under Article 15.1. 9.2. In view of the above clause of the supply contract, the findings of the adjudicating authority that ownership of the Balance of Plant and items stands transferred only at the time of completion of work, is not correct. In the case of imported equipments as well as the Balance of Plant equipment, the ownership/ title lies with the service recipient when the same are received at site. Accordingly, it has to be held that after receipt of balance equipment, the title/ ownership of the same is transferred to the service recipient. Accordingly, adjudicating authority cannot go beyond the CBEC Circular No. 150/1/2012-ST dated 08.2.2012 wherein it has been clarified that for the works contract executed before 07.7.2009, free of cost supplies are not required to be added to the gross amount, for the purpose of payment of service tax. There is no evidence on record to convey that both, the supply contract and the construction contract were artificially bifurcated after introduction of explanation to Rule 3(1) of Works Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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