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TMI Blog2016 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... t case are that the appellant is providing services under the category of Consulting Engineer and have obtained Service Tax Registration. On the basis of intelligence that the appellant did not discharge the service tax liability correctly and suppressed the value of taxable service to the Department, the Preventive Wing of the Commissionerate conducted the investigation. On scrutiny of the relevant documents viz. Balance Sheet, Profit and Loss Account, Invoice/Contract etc. it was revealed that apart from rendering Consulting Engineering services, the assessee provided a number of other taxable services for which no service tax was paid, in contravention of statutory provisions. Thereafter a show-cause notice dated 11.05.2005 was issued al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 12 Design & Engineering Charges 11,82,800 59,100 Consulting Engineer 13 Drawing Charges 2,86,74,425 22,48,654 Consulting Engineer 14 Erection, Commissioning charges 87,18,326 6,97,466 Erection, Commissioning & Installation 15 Mechanical Commissioning charges 60,000 4,800 Erection, Commissioning & Installation 16 Service charges towards supply of equipments 3,20,20,884 23,31,297 Consulting Engineer 17 Engineering Charges 3,08,01,351 17,71,431 Consulting Engineer 18 Earthing Philosophy 2,10,250 10,513 Consulting Engineer 19 Technical specification 11,76,000 94,080 Consulting Engineer 20 O&M Manual 28,10,000 1,40,400 Consulting Engineer 21 Soil Investigation 20,76,251 1,49,900 Technical Testi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices for the sake of levying service tax. He further submitted that there was a lack of machinery provisions in the Act to levy service tax on composite contracts/works contract and as per the intention of the parties in the impugned transaction the primary objective of the agreement was that of sale. He further submitted that the issues involved in the present case is no more res integra and has been settled in favour of the appellant by the Hon'ble Supreme Court of India in its judgment in the case of CCE & Cus. Kerala V. M/s. Larsen and Toubro Ltd. reported at 2015-TIOL-187-SC-ST wherein the Hon'ble Supreme court has held that the service tax charging section itself must lay down with specificity that the levy of service tax can only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofar as they are relatable to supply of labour and services, and the same goes for the profit that is earned by the contractor. These deductions are ordinarily to be made from the contractor's accounts. However, if it is found that contractors have not maintained proper accounts, or their accounts are found to be not worthy of credence, it is left to the legislature to prescribe a formula on the basis of a fixed percentage of the value of the entire works contract as relatable to the labour and service element of it. This judgment, therefore, clearly and unmistakably holds that unless the splitting of an indivisible works contract is done taking into account the eight heads of deduction, the charge to tax that would be made would otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that this has, in fact, been done by the Finance Act, 1994 Act is wholly incorrect as it ignores the second Gannon Dunkerley decision of this Court. Further, the finding that Section 67 of the Finance Act, which speaks of "gross amount charged", only speaks of the "gross amount charged" for service provided and not the gross amount of the works contract as a whole from which various deductions have to be made to arrive at the service element in the said contract. We find therefore that this judgment is wholly incorrect in its conclusion that the Finance Act, 1994 contains both the charge and machinery for levy and assessment of service tax on indivisible works contracts. 43. We need only state that in view of our finding that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,043 5 Deputation of Engineers 44,795 6 Installation Final Report 22,500 7 Installation supervision charges 12,500 8 Supervision charges 51,635 9 Testing Charges 1,088 10 Troubleshooting 33,148 11 Design & Engineering Charges 59,100 12 Drawing Charges 22,48,654 13 Engineering charges 17,71,431 14 Earthing Philosophy 10,513 15 O & M Manual 1,40,400 16 Soil Investigation 1,49,900 Total 67,14,904 3.2. He further submitted that out of the total demand a sum of Rs. 23,31,297/- (Rupees Twenty Three Lakhs Thirty One Thousand Two Hundred and Ninety Seven only) has to be deducted because it is on account of goods supplied to ONGC and there is no service element in it and further a sum of Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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