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TMI Blog2019 (2) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... it is concluded that the work undertaken by the appellants are only design, engineering, documentation, manufacture and supply of equipment/machinery and design involved in erection and commissioning of such machinery. The appellants have not undertaken any erection and commissioning activity as provided in sub-clause (a) or (e) of the definition of Works Contract Service. The supervision of erection and commissioning cannot be equated with civil work of erection and commissioning or installation of plant and machinery. When the appellants have not done any erection and commissioning activity. The levy of service tax under WCS is not attracted. The demand cannot sustain under Works Contract Services - appeal allowed - decided in favor of appellant. - ST/00222,00223/2010 - FINAL ORDER Nos. 43027-43028/2018 - Dated:- 4-12-2018 - Smt. Sulekha Beevi C.S, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) For the Appellant: Shri N. Prasad, Adv. For the Respondent: Shri K. Veerabhadra Reddy, ADC (AR) ORDER Per Bench: Brief facts are that the appellants are engaged in the business of design, drawing, manufacture and supply of plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in a Works Contract is also given in the said definition from (a) to (e). The work orders would show that the scope of the work deals with design, engineering, manufacture, supply and supervision of erection and commissioning of equipment etc. The department has raised the demand alleging that the contracts are in the nature of turnkey projects and that these are composite in nature involving service element of erection and commissioning. He emphasized that the appellants do not undertake erection and commissioning of plant and machinery. They merely supervise the erection and commissioning of equipments. Such activity of supervision does not fall within the definition of Works Contract Service and further; that the appellants have discharged service tax on such activity under Consulting Engineer Services. The learned counsel referred to the Letter of Intent awarded by M/s. Jayaprakash Associates Ltd.,, dated 14.10.2006. Letter of Intent awarded by M/s. Jayaprakash Associates Ltd., dated 14.10.2006. This is available at Page 119 of Volume II. The Work Order is for design, engineering, manufacture, supply and supervision of erection and commissioning of equipment . It is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the erection and commissioning of equipment. Relevant to this work order dated 26.10.2006, is the Letter of Intent dated 14.10.2006. 2.3 Appellant provides for design, drawings apart from providing for the equipment. Clause 1 of the Letter of Intent contemplates provision of design and drawings. Clause 2 contemplates supply of equipment. Clause 3 contemplates delivery of equipment Kindly see page 142 of Volume II. The price is set out by Clause 4 and it is for design, engineering and supply of plant and machinery. 2.4 Thus, the design engineering element is inbuilt in the sale price and subjected to VAT. Clause 4(2) contemplates deputation of engineers and this element had suffered service tax under Consultation Engineering Service category contemplated by Section 65 (105) (zb) of the Finance Act, 1994. 2.5 He referred to the contract with M/s. Zuari Cement Ltd., and submitted that the scope of supply is set out as basic and detailed engineering necessary for correct supply, installation and operation of the supply as defined under Exhibit H in pages 187-188 of Vol. II. The said documents gives a clear description of the nature of contract, which is merely supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. He argued that the impugned order does not call for any interference. 4. Heard both sides. 5. For better appreciation, the definition of Works Contract Services under section 65(105)(zzzza) is reproduced as under:- 65 (105): Taxable service means any service provided or to be provided,- (zzzza) to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation, ---For the purposes of this sub-clause, works contract means a contract wherein,--- (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, --- (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t- matter of the demand, we are able to conclude that the work undertaken by the appellants are only design, engineering, documentation, manufacture and supply of equipment/machinery and design involved in erection and commissioning of such machinery. The Letter of Intent in respect of M/s. J.K. Lakshmi dated 24.05.2007 provides for period of delivery of the equipment. There is no mention of the period for performance of service or period by which the erection and commissioning has to be executed. So also in clause (6), the terms of payment stipulates that the payments in instalments has to be paid on dispatch of documents (design), equipments etc., and does not speak about performance of erection and commissioning. Similar is the case with respect to the work order in M/s. Jayaprakash Associates Ltd. In the work order of M/s. Zuari Cements Ltd., clause (3) specifically excludes civil work, erection of equipment, civil and structural, engineering etc. All these would go to show that the appellants have not undertaken any erection and commissioning activity as provided in sub-clause (a) or (e) of the definition of Works Contract Service. The supervision of erection and commissioning ..... 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