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TMI Blog2007 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... the proviso to Section 73 of the Finance Act, 1994. This notice also demanded interest on tax under Section 75 of the Finance Act, 1994. It also proposed to impose penalties on the assessees under Sections 76, 77 & 78 of the said Act. All these demands/proposals were contested by the assessee in their reply to the SCN. In adjudication of the dispute, the Commissioner confirmed the entire demand of Service Tax (with interest thereon) against the assessee but dropped the proposal to impose penalties on them. The assessee's appeal No. S/126/06 is against this demand of service tax and the Revenue's appeal No. S/130/06 is against the non-imposition of penalties. 2. A similar SCN was issued on 21-10-2005 to the assessee demanding service tax (Rs. 4,59,69,068/-) under Section 73 of the Finance Act, 1994 for the subsequent period upto 31-7-2005 along with interest under Section 75 of the Act. This notice also proposed penalties on the assessee under Sections 76 & 77 of the said Act. These demands/proposals were also contested by the assessee in the same way as in their reply to the earlier SCN. The adjudicating authority confirmed the demand of tax to the extent of Rs. 4,20,21,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bro Ltd. - 2006 (4) S.T.R. 63 (Tri.-Mumbai), Turbotech Precision Engg. Pvt. Ltd. v. CCE, Bangalore - 2006 (3) S.T.R 765 (Tri.-Bang.) etc. Similarly, the ratio of the decision in Daelim case is applicable to the present case also. In order to interpret a contract as to whether it pertains to sale of goods or rendition of service, the essence of the contract has to be taken into account. The predominant object of the contracts between the assessee and the banks was sale of ATMs and not rendering of installation/commissioning service and, therefore, as per the ratio of the Supreme Court's decision in State of Andhra Pradesh v. Kone Elevators (India) Ltd. - 2005 (181) E.L.T. 156 (S.C.), it has to be held that the incidental activity of installation and commissioning of ATMs is not chargeable to service tax in addition to levy of sales tax on the subject matter of the works contracts. The assessee has already discharged sales tax liability on the entire consideration received by them from banks and, therefore, any levy of service tax on the incidental activity of installation and commissioning of ATMs would be contrary to the ratio of the Apex Court's judgment in BSNL v. UOI, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned decision of the Commissioner amounts to supplementing something which the charging section did not provide. The taxing statute should clearly and unambiguously lay down three components viz, the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients, then there is no tax in law as ruled by the apex court in Mathuram Agrawal v. State of Madhya Pradesh, - (1999) 8 SCC 667. In the instant case, even the first ingredient did not exist during the period of dispute inasmuch as it was only on 1-5-2006 that ATM-related services became taxable and it was only from 1-6-2007 that indivisible works contracts could be charged to service tax. The assessee did not act as a 'commissioning or installation agency' of the banks. They were engaged in the sale of ATMs only. The commissioning and installation of ATMs were only incidental to such sale. Therefore, the assessee cannot be regarded as a 'commissioning or installation agency' within the meaning of this expression defined under Section 65(29) and, consequently, they cannot be burdened with service tax liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax on the service rendered by the assessee to the banks during the material period. Hence it cannot be said that service tax was demanded from the assessee for the said period without any charging provision. The relationship between the assessee and the banks is comparable to that between a mandap-keeper and his customer and, therefore, the decision of the Hon'ble Supreme Court in Tamil Nadu Kalyana Mandapam Assn. v. UOI - 2006 (3) S.T.R. 260 (S.C.) = 2004 (167) E.L.T. 3 (S.C.) is applicable to the present case. Notification No. 21/97-S.T., dt. 26-6-97 issued under Section 93 of the Finance Act, 1994, which was considered by the apex court in the said case, is similar to Notification No. 19/2003-S.T. relied on by the Revenue in the present case. It exempted 40% of the gross amount charged by a mandap-keeper from his client for the use of the mandap and the connected facilities including catering services, from payment of service tax. The apex court held that the transaction between the mandap-keeper and his customer was not in the nature of sale or hire- purchase of goods but essentially in the nature of service and, accordingly, the levy of service tax on the service ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid grounds. Admittedly, indivisible works contracts came to be exigible to service tax for the first time w.e.f. 1-6-2007 only. Prior to that date, such contracts could not be vivisected for the purpose of levy of service tax on the service component. The indivisibility of works contracts for a period prior to 1-6-2007 was declared by this Tribunal in Daelim case, wherein the company had obtained a contract from M/s. Indian Oil Corporation Ltd. for construction a diesel hydro plant. That contract was on turnkey basis, for which IOC paid a lump sum of about Rs. 185 crores to the assessee. The contract involved residual process design, detailed engineering, procurements supply, construction, fabrication, erection, installation, testing, commissioning and mechanical guarantee. The department in a SCN, asked the assessee to pay service tax on residual process design and detailed engineering in the category of 'consulting engineers' service'. This demand was contested by the party. After examining the terms and conditions of the contract, the Tribunal found that assessee's contract with IOC was a works contracts on turn key basis and not a consultancy contract Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter." The very first requisite for levy of service tax from the assessee in respect of the works contracts executed by them during the period of dispute is lacking in the present case i.e. the taxable event. Indivisible works contracts like the ones executed by the assessee for the benefit of banks during the said period were not exigible to service tax during that period. Such events became taxable only w.e.f. 1-6-2007. It is no defence for the Revenue to say that ATMs are also equipments and, therefore, the works undertaken by the assessee for the benefit of banks were subject to service tax as 'service provided to a customer by a commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases of Govind Saran Ganga Saran (supra), and Mathuram Agrawal (supra), a taxing statute must clearly and unambiguously lay down the charging provision specifying the taxable event, the person liable to pay the tax and the rate at which he should pay. The taxing event in the instant case is the execution of turnkey projects involving sale of ATMs to banks coupled with the incidental activities of installation, commissioning etc. These projects were executed by the assessee in terms of the purchase orders placed on them by the banks concerned. The payments for these works were made by the banks against invoices raised by the assessee, wherein the gross value was mentioned without segregation of price of ATM, installation/commissioning and other charges. The lower authority found these projects to be indivisible. These facts are enough for us to hold that there could be no levy of service tax on the above works contracts prior to 1-6-2007. In other words, during the period of dispute, the subject events were not taxable in the absence of the requisite charging provision. Charging provisions are to be found in the statute itself and, where there is none in the statute, they cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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