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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 ..... service tax. Show-cause notice dated 05.05.2008 was issued proposing to demand the service tax under Works Contract Services for the period from 01.06.2007 to 31.12.2007. After due process of law, the original authority confirmed the demand along with interest and also imposed penalty under section 76 of the Finance Act, 1994. Hence this appeal. 2. On behalf of the appellants, the learned counsel Shri N. Prasad appeared and argued the matter. He submitted that the demands are made under Works Contract Services which are taxable with effect from 01.06.2007. During the disputed period, the appellants were engaged in the activity of manufacture, trading and supply of plant and machineries to cement, coal grinding and mineral process industry. They have not executed any Works Contract Services as alleged in the show-cause notice and, therefore, the demands cannot sustain. In respect of the work orders which are subject matter in these appeals, the transactions involved are of three types. Firstly, manufacture and sale of the appellants' own goods; secondly, purchase and sale of goods belong to vendors; and thirdly, provisions of services in the form of supervision and engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved. Clause 2.2 at Page 122 of Volume II which indicates that "sales tax and excise duty will be those at the time of dispatch". There is a clause for delivery which is Clause 3.0. The Appellants' obligation is to deliver the equipment. The above indicate that no erection and installation work was involved. 2.1 In the instant case, apart from effecting sales of their manufactured goods, the Appellants have effected sales in transit of the goods purchased by them from manufacturers and claimed exemption under Section 6(2) of the CST Act, 1956. For the purpose of this sale, the Appellant has obtained a certificate set out in Section 6(2)(a). This certificate is Form E-1 and has to be issued by the vendor who sells it to the transit seller. Form E1 is contemplated by Rule 12(7) of the Central Sales Tax (R & T) Rules, 1957. The Appellant has also obtained a C Form from its buyer. It is a declaration contemplated by sub-clause (b) of the Proviso to Section 6(2), read with Rule 12(1) of the Central Sales Tax (R & T) Rules, 1957. These declarations have been filed and the sale has been exempted by VAT authorities as a sale effected in transit. In other words, the above will indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection, Commissioning or Installation Services and mere designs, manufacture & supply and, therefore, would not fall under Works Contract Services. The Commissioner in the impugned order has relied upon the decision in the case of State of Andhra Pradesh Vs M/s. Kone Elevators (India) Ltd. reported in 2005 (181) E.L.T. (S.C.). The reliance placed on the said decision is wrong for the reason that it is no longer a good law. The decision was referred to the Larger Bench of the Supreme Court and the judgment is reported in (2014) 7 SCC 1. 3. The learned Authorised Representative Shri K. Veerabhadra Reddy supported the findings in the impugned order. He referred to the definition of Works Contract contained in section 65(105)(zzzza) and submitted that clause (e) of the said definition mentions about turnkey projects which includes engineering, procurement and construction or commissioning [EPC] project. The agreement dated 26.11.2002 entered by the appellants with foreign collaborator would show that the object of the agreement is to undertake and execute contracts on turnkey basis. Thus, the works done by the appellants are in the nature of EPC/turnkey contracts which involve erecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides that Works Contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods. The second clause enumerates the various services that would make the activity a Works Contract. Clause (e) specifies about the turnkey projects which involve both design, engineering as well as installation and commissioning activity. In the case before us, it is correct that in the agreement dated 26.11.2002 entered by the appellants with the foreign collaborator. The agreement is to undertake projects in the nature of turnkey projects also. The question is whether the work orders executed by the appellants pursuant to such agreement involves activities falling under (a) to (e) so as to bring it under the definition of Works Contract Service. We have perused the documents like work orders, purchase orders etc. The Commissioner has reproduced the work order with respect to M/s. Jayaprakash Associated Ltd., and M/s. J.K. Lakshmi Cements in the impugned order. The works orders show that the contract is for design, engineering, manufacture, supply and supervision of erection and commissioning of equipment in the case of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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