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TMI Blog2022 (8) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... 67 OF 2022 (arising out of SLP (C) No. 21828 of 2015) CIVIL APPEAL NO. 6792 OF 2010 CIVIL APPEAL NO. 2668 OF 2022 (arising out of SLP (C) No. 32501 of 2015) M/s. Total Environment Building Systems Pvt. Ltd. Versus The Deputy Commissioner of Commercial Taxes & Ors. , YFC Projects Pvt. Ltd. Versus Union of India , M/s. G.D. Builders Versus Union of India & Anr. , M/s. National Building Construction Corporation Ltd. (NBCC) Versus Union of India & Anr. , M/s. Unitech Ltd. Versus Union of India & Ors. , M/s. National Building Construction Corporation Ltd. (NBCC) Versus Union of India & Ors. , M/s. Larsen and Toubro Ltd. Versus Commissioner of Service Tax, Delhi , Commissioner of Service Tax Mumbai - II Versus M/s. IOT Infrastructure & Energy Services Limited , M/s. L&T Hydrocarbon Engineering Limited (previously known as Larsen & Toubro Limited) Versus Commissioner of Service Tax, Mumbai M. R. SHAH And B. V. NAGARATHNA , JJ. For the Parties : Ms. Madhavi G.Divan, ASG Mr. Arijit Prasad,Sr. Adv. Mr. A.K. Panda, Sr.Adv. Mr. Vishesh Kalra, Adv. Ms. Aishani N., Adv. Mr. Mukesh Kumar Maroria, AOR Mr. B. Krishna Prasad, AOR Mr. Praveen Kumar, AOR Mr. Sanand Ramakrishnan, AOR Mr. Praveen Sw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of G.D. Builders (supra) and has observed and held that the observations made by the Delhi High Court in paragraph 31 is wholly inaccurate 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. At this stage, it is reported that as such Civil Appeal No. 6523 of 2014, now under consideration was also heard alongwith the group of appeals while deciding the case of Larsen and Toubro Limited (supra) and even the papers of Civil Appeal No. 6523 of 2014 were called for by the Bench concerned. However, it appears that by oversight and/or by inadvertence Civil Appeal No. 6523 of 2014 has not been decided and disposed of and therefore kept pending, which is now notified before this Court alongwith the other appeals. 3.3 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Delhi at New Delhi dated 09.01.2014 in Writ Petition (C) No. 6803 of 2013 by which the Division Bench of the High Court relying upon its earlier decision in the case of G.D. Builders (supra) has dismissed the said writ petition, the assessee - original writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision, after considering the entire scheme of levy of service tax pre-2007 and post-2007, this Court has specifically observed and held that on indivisible works contracts, for the period prior to introduction of Finance Act, 2007, service tax was not leviable under Finance Act, 1994. It is specifically observed and held that works contracts on which the service tax was levied under the Finance Act, 1994 is distinct from contracts of service. 6. Ms. Madhavi Divan, learned Additional Solicitor General, appearing on behalf of the Revenue, has not disputed that the issue involved in the present appeals is as such squarely covered by the decision of this Court in the case of Larsen and Toubro Limited (supra). However, according to Ms. Madhavi Divan, the decision of this Court in the above case, holding that there was no service tax leviable on works contracts prior to the amendment by the Finance Act, 2007 needs to be re-considered. 6.1 In support to her prayer to re-consider the decision of this Court in the case of Larsen and Toubro Limited (supra), Ms. Madhavi Divan, learned Additional Solicitor General has made a number of submissions and has taken us to the legislative h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and orders passed by the High Court of Delhi, the High court has followed its decision in the case of G.D. Builders (supra). That the said decision of the Delhi High Court in the case of G.D. Builders (supra) has been held to be wholly incorrect by this Court in the case of Larsen and Toubro Limited (supra). He has taken us to the relevant observations made by this Court in the case of Larsen and Toubro Limited (supra) in paragraphs 28, 29, 30, 31, 32, 33, 38 and 39. 7.1 It is vehemently submitted by Shri Datar, learned Senior Advocate appearing on behalf of some of the assesses that in the case of Larsen and Toubro Limited (supra), it is specifically observed that a taxable service under the Finance Act, 1994 covers service contracts simpliciter and not the Composite Works Contracts (reliance is placed upon the observations made in paragraphs 23 and 29 of the said decision). It is contended that while referring to exemption notifications in paragraph 42, it has been specifically observed and held that since the levy of service tax has been found to be non-existent, no question of any exemption would arise. It is further urged by Shri Datar, learned Senior Advocate appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the Finance Act, 2007. It is submitted that for the first time, the service tax is levied on the Composite Works Contracts pursuant to the Finance Act amendment made vide Finance Act, 2007. However, for the reasons to be recorded hereinbelow, we do not propose to elaborately deal with and/or consider the elaborate submissions made on behalf of the respective parties on whether the service tax was leviable on Composite Works Contracts prior to Finance Act, 2007 or not and on whether the decision of this Court in the case of Larsen and Toubro Limited (supra) is required to be re-considered, as now submitted and/or prayed on behalf of the Revenue. 8. Heard, Ms. Madhavi Divan, learned ASG appearing on behalf of the Revenue and Shri Arvind Datar, learned Senior Advocate and other learned senior and other counsel appearing on behalf of the respective assessees. 9. The short question which is posed for consideration of this Court is, "whether for the period prior to introduction of the Finance Act, 2007, the service tax would be leviable on the Composite Works Contracts?" 10. At the outset, it is required to be noted that whether post-2007, the service tax was leviable on Composite W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file any review application to review and/or recall the judgment and order passed by this Court in the case of Larsen and Toubro Limited (supra). If the Revenue was so serious in their view that decision of this Court in the case of Larsen and Toubro Limited (supra) requires re-consideration, Revenue ought to have filed the review application at that stage and/or even thereafter. No such review application has been filed even as on today. (viii) Merely because in the subsequent cases, the amount of tax involved may be higher, cannot be a ground to pray for reconsideration of the earlier binding decision, which has been consistently followed by various High Courts and the Tribunals in the entire country. 10.3 Keeping in mind the aforesaid factual aspects, the prayer made on behalf of Revenue to re-consider the decision of this Court in the case of Larsen and Toubro Limited (supra) and to refer the matter to the Larger Bench is required to be considered. 10.4 While considering the prayer made on behalf of the Revenue to review and/or revisit the earlier decision of this Court in the case of Larsen and Toubro Limited (supra), few decisions on the principle of stare decisis ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r valid and compulsive reasons, it is necessary that the earlier decision should be revised. When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossible. *** 118. The doctrine of stare decisis is generally to be adhered to, because well-settled principles of law founded on a series of authoritative pronouncements ought to be followed. Yet, the demands of the changed facts and circumstances, dictated by forceful factors supported by logic, amply justify the need for a fresh look." 456. the Constitution Bench in Indra Sawhney [Indra Sawhney v. Union of India, 1992 Supp (3) SCC 217] speaking through B.P. Jeevan Reddy, J. has held that the relevance and significance of the principle of stare decisis have to be kept in mind. It was reiterated that in law certainty, consistency and continuity are highly desirable features. Following are the exact words in para 683 : (SCC p. 657) "683. ... Though, we are sitting in a larger Bench, we have kept in mind the relevance and significance of the principle of stare decisis. We are conscious of the fact that in law certainty, consistency and continuity are highly desirable features. Where a decision has stood the test of time and has never been doubted, we have respected it ... unless, of course, there are compelling and strong reasons to depart from it. Where, however, such un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ganises itself based on the present legal order. When substantial judicial time and resources are spent on references, the same should not be made in a casual or cavalier manner. It is only when a proposition is contradicted by a subsequent judgment of the same Bench, or it is shown that the proposition laid down has become unworkable or contrary to a well-established principle, that a reference will be made to a larger Bench. In this context, a five-Judge Bench of this Court in Chandra Prakash v. State of U.P. [(2002) 4 SCC 234], after considering series of earlier rulings reiterated that : (SCC p. 245, para 22) "22. ... The doctrine of binding precedent is of utmost importance in the administration of our judicial system. It promotes certainty and consistency in judicial decisions. Judicial consistency promotes confidence in the system, therefore, there is this need for consistency in the enunciation of legal principles in the decisions of this Court." (emphasis supplied)" 10.7 It is observed and held in the aforesaid decision that even the rule of overruling the judgments should be applied with great caution, and only when the previous decision is manifestly wrong, as, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided alike. This is the foundation of the doctrine of precedent, which has considerable benefits and advantages. Emphasis on the law of precedent, which promotes certainty and consistency, was also noticed in Sundarjas Kanyalal Bhatija and Ors. Vs. Collector Thane, Maharashtra and Ors., (1989) 3 SCC 396, by emphasizing that it is the duty of the courts to make the law more predictable. Law must be made more effective as a guide to behaviour, otherwise, the lawyers or, for that matter, laymen would be in a predicament and would not know how to advise or conduct themselves. The general public should not be in a dilemma to obey or not to obey such law. 11.4 In Medley Pharmaceuticals Limited v. Commissioner of Central Excise and Customs, Daman, (2011) 2 SCC 6014, the question before this Court was whether, "physicians' samples" are excisable goods considering that they are prohibited from being sold under the Drugs and Cosmetics Act, 1940. Observing that since this Court has consistently held that the medical supplies supplied to the doctors are liable to excise duty, the issue involved in this case was no longer res integra. Relying on the Constitutional Bench decision in Waman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1957 and several hundreds and thousands of cases have already been dealt with on the basis thereof and the effect of a declaration of a contra law would be totally disastrous affecting the very basics of the revenue jurisprudence. It is true that the doctrine has no statutory sanction but it is a rule of convenience, expediency, prudence and above all the public policy. It is to be observed in its observance rather than in its breach to serve the people and subserve the ends of justice." 12. What was said by the Constitution Bench in Indra Sawhney Vs. Union of India, 1992 Supp (3) SCC 217 and Keshav Mills Co. Ltd. Vs. Commissioner of Income Tax, Bombay North, Ahmedabad, AIR 1965 SC 1636, on the principle of stare decisis clearly bind us. The judgment of this Court in the case of Larsen and Toubro Limited (supra) has stood the test of time and has never been doubted earlier. As observed hereinabove, the said decision has been followed consistently by this Court as well as by various High Courts and the Tribunals. Therefore, if the prayer made on behalf of the Revenue to reconsider and/or review the judgment of this Court in the case of Larsen and Toubro Limited (supra) is accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed of. Therefore, once the decision of the Delhi High Court in the case of G.D. Builders (supra), which is the subject matter of Civil Appeal No. 6523 of 2014 has been held to be wholly incorrect, Civil Appeal No. 6523 of 2014 filed by M/s. G.D. Builders has to be allowed and the judgment and order passed by the Delhi High Court has to be quashed and set aside. 13.1 Now, so far as Civil Appeal No. 6525 of 2014, Civil Appeal No. 6526 of 2014 and Civil Appeal No. 2666 of 2022 are concerned, the High Court has dismissed the said writ petitions preferred by the respective assesses relying upon its earlier decision in the case of G.D. Builders (supra). Once the decision of the Delhi High Court in the case of G.D. Builders (supra) is held to be wholly incorrect by this Court in the case of Larsen and Toubro Limited (supra), Civil Appeal No. 6525 of 2014, Civil Appeal No. 6526 of 2014 and Civil Appeal No. 2666 of 2022 are also to be allowed. 13.2 So far as Civil Appeal Nos. 8673-8684 of 2013 preferred by the assessee - M/s. Total Environment Building Systems Pvt. Ltd. are concerned, the same are against the judgment and order passed by the High Court of Karnataka in Writ Appeal Nos. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 are hereby quashed and set aside. Necessary consequences shall follow. Civil Appeal No. 6792 of 2010 is hereby dismissed. In the facts and circumstances of the case, there shall be no order as to costs. Note :- I have had the advantage of perusing the supplementary judgment and order proposed by my learned Sister, B.V. Nagarathna, J. As such, Her Ladyship has agreed with the conclusions arrived at by me in the present judgment and order, however, has thought it fit to give additional reasons for the conclusions and has dealt with the submissions made by Ms. Madhavi Divan on merits. However, for the reasons stated above as this Court has not agreed with the prayer made by Ms. Divan, learned ASG to reconsider the decision in the case of Larsen and Toubro Limited (supra) on the principle of stare decisis and on the principle of consistency, I deem it proper not to deliberate further on merits, as observed above, the issue involved is squarely covered by the decision of this Court in the case of Larsen and Toubro Limited (supra), which has been subsequently followed by this Court as well as by various High Courts and Tribunals. J. [M.R. SHAH] J. [B.V. NAGARATHNA] I have had th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because works contract by itself is not taxable. A works contract as defined by the amendment has two components, namely, a sale component and a service component. It is only when both the components are satisfied and coexist that a contract becomes a works contract as defined. Further, it is only on the service component of the works contract that the service tax is leviable w.e.f. 1st June, 2007. As far as the sale component in a works contract is concerned, the Sales Tax laws of the respective States would apply. It is also necessary to state that after the enforcement of the Central Goods and Services Tax Act (CGST), 2017 regime the matter is covered under that Act. Therefore, it is necessary to gather the meaning of works contract from judicial precedent in order to answer the rival submissions in the instant case. Section 65(105)(zzzza) of the Finance Act, 1994 as amended by the Finance Act, 2007 which defines work contract, has been extracted as under, for ease of reference: " '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, and (ii) such contract is for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponents: firstly, sale of goods involved in the execution of such contracts which would attract Sales Tax or Value Added Tax (VAT) as the case may be, i.e., prior to the enforcement of the Goods and Services Tax regime and secondly, a service component which is specified in clause (ii)(a)( e) of the definition of works contract which would attract Service Tax under the provisions of the Finance Act, 1994 as amended in the year 2007. If both the above requisites are present, then Service Tax on works contract is leviable on the service component. This is clear from the use of the word "and" between components (i) and (ii) of the definition of works contract under Clause (zzzza) of Section 65 of the Finance Act, 1994 which is as per the amendment in the year 2007. Thus, the definition speaks of a composite works contract comprising of an element of sale and an element of service. Having regard to the specific definition of works contract introduced in the Finance Act, 1994, w.e.f. 1st June, 2007 and bearing in mind that both clauses (i) as well as (ii) of the definition have to be satisfied before the levy of service tax on the service component of a works contract, it is necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say - [(29A) "tax on the sale or purchase of goods" includes - (a) XXXXX (b) A tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;" C. In Gannon Dunkerley (II) Gannon Dunkerley and Co. vs. State of Rajasthan [1993 (1) SCC 364], the Constitution Bench of this Court explained the effect of the legal fiction introduced by subclause (b) of Clause (29A) of Article 366 of the Constitution. The following principles were enunciated, to outline the operation of subclause (b) of Clause (29A) of Article 366: a) That by virtue of the legal fiction in Clause 29A, even in a single indivisible works contract, there is a deemed sale of goods and such sale has all the incidents of 'sale of goods.' b) That the value of goods involved in the execution of a works contract may be determined by taking into account the value of the entire works contract and deducting therefrom, the charges towards labour and services. c) That the following charges towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned provisions, the Constitution Bench explained the unique features of a composite contract relating to work and materials and expounded on the meaning, effect and amplitude as also contours of the provisions pertaining to the taxing power of the States in relation to works contract particularly in paragraphs 3840 of the judgment. F. In light of the said discussion, this Court concluded that the transfer of any goods in Subclauses (a) to (f) of Clause (29A) of Article 366 of the Constitution is by way of a deeming provision i.e., a deemed sale. This Court however, cautioned that the levy of sales tax after the 46th Amendment to the Constitution of India has to still comply with the restrictions imposed under Articles 286 and 269 of the Constitution. G. Later a threejudge bench of this Court in State of AP v. Kone Elevators [(2005) 3 SCC 389] had taken the view that a contract for manufacture, supply and installation of lifts is a "sale" and the entire value of the consideration can therefore be taxed under the sales tax law. However, the matter was subsequently referred to a larger Bench to review the issue afresh. This Court, on rehearing the matter referred to it, in Kon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge and many varieties of contract. Parliament had such wide meaning of "works contract" in its view at the time of the Fortysixth Amendment. The object of insertion of clause (29A) in Article 366 was to enlarge the scope of the expression "tax on sale or purchase of goods" and overcome Gannon Dunkerley (1) [State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd., AIR 1958 SC 560 : 1959 SCR 379] . Seen thus, even if in a contract, besides the obligations of supply of goods and materials and performance of labour and services, some additional obligations are imposed, such contract does not cease to be works contract. The additional obligations in the contract would not alter the nature of contract so long as the contract provides for a contract for works and satisfies the primary description of works contract. Once the characteristics or elements of works contract are satisfied in a contract then irrespective of additional obligations, such contract would be covered by the term "works contract". Nothing in Article 366(29A)( b) limits the term "works contract" to contract for labour and service only. The learned Advocate General for Maharashtra was right in his submission that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not have the power to tax services by including the cost of such service in the value of goods but that does not detract the State to tax the sale of goods element involved in the execution of works contract in a composite contract like contract for construction of building and sale of a flat therein. In light of the above discussion, the legal proposition was summarised in paragraph 97 of the judgment. Evolution of the practice in relation to the levy of service tax on works contract: (6) Service tax was introduced in India vide the Finance Act, 1994. Service tax is legislated by Parliament under the residuary entry i.e. Entry 97 of List I of the Seventh Schedule of the Constitution of India read with Article 248 of the Constitution. The service tax provisions have the following basic scheme: (i) Section 65 of the Act provides for taxable services; (ii) Section 66 of the Act provides for the charge of service tax by the person designated as "the person responsible for collecting the service tax" for the Government; (iii) Section 67 of the Act provides for the value of taxable service which is to be subjected to 5% service tax; and (iv) Section 68 of the Act provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visaged in a composite contract as contradistinguished from an indivisible contract. Thus, a distinction was made between an indivisible contract and a composite contract. In doing so, it was held that a composite contract, would have to be construed such that the legal fiction in Article 366 (29A) allowing tax on the sale element of a works contract would have to be applied only to the extent for which it was enacted, i.e., to the extent of the value of the sale component of the contract and should not be applied in relation to the service element of the transaction. That taxes, in the nature of a service tax could be applied in relation only to the service element. c) In Nagarjuna Construction Company Ltd. vs. Government of India and Ors. [(2013) 1 SCC 721], this Court discussed the effect of introduction of an express charging provision to impose tax on works contract, w.e.f. 01st June, 2007, on works contract which were entered into prior to 01st June, 2007. In the said case, the appellant therein was said to be in the business of carrying out composite construction contracts. The appellantassessee had paid salestax/ VAT on those contracts under the Andhra Pradesh General Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zzzza) to Section 65(105). The said introduction was made pursuant to the Finance Act, 2007, which expressly made the service component in such works contract liable to service tax w.e.f. 1st June, 2007. The amendment was made to the said section of the Finance Act, 1994 by which works contract which were indivisible and composite could be split so that only the labour and service element of such contracts would be taxed as service tax. (7) Having noted the above developments, it is necessary to discuss the judgment in Larsen and Toubro Ltd. (supra) in detail as learned ASG, Ms. Divan has vehemently submitted that the said judgment requires reconsideration. It may be noted that this judgment concerned the position of law prior to the amendment made to the Finance Act, 1994, w.e.f. 1st June, 2007, incorporating the definition of works contract as under: a) In the aforesaid case, this Court traced the historical setting within which the controversy leading up to the 46th amendment in the context of levy of sales tax on works contract progressed. Taking up the question as to whether service tax could be levied on the service element of a works contract, it was observed that service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006, this Court observed that crucial to the understanding and determination of the issue at hand was the second Gannon Dunkerley and Co. vs. State of Rajasthan [(1993) 1 SCC 364] (Gannon Dunkerley II) (supra) . That in the said judgment the modalities of taxing composite indivisible works contract was gone into which has been referred to above. It was observed that the value of the goods involved in the execution of the works contract will have to be determined by taking into account the value of entire works contract and deducting therefrom the charges towards labour and services which would cover - "(a) labour charges for execution of the works; (b) amount paid to a subcontractor for labour and services; (c) charges for planning, designing and architect's fees; (d) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) cost of consumables such as water, electricity, fuel, etc. used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract; and (f) cost of establishment of the contractor to the extent it is relatable to supply of labour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the discipline of computer hardware engineering or computer software engineering; * * * (zzd) to a customer, by a commissioning and installation agency in relation to erection, commissioning or installation; * * * (zzh) to any person, by a technical testing and analysis agency, in relation to technical testing and analysis; * * * (zzq) to any person, by a commercial concern, in relation to construction service; * * * (zzzh) to any person, by any other person, in relation to construction of a complex; Explanation : For the purposes of this subclause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorized by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer;" d) Speaking about the mutually exclusive taxation and powers of the Centre and the State, the dichot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred in the execution of a works contract." It was also observed that while introducing the concept of service tax on service element of indivisible works contract various exclusions are also made, such as, works contract in respect of roads, airport, airways transport, bridges, tunnels and dams, possibly in the national interest. The implication of the exclusion means that such contracts were never intended to be the subjectmatter of the service tax. e) Further, in Larsen & Toubro Ltd. (supra) the correctness of the judgment in G.D. Builders vs. Union of India [(2013) 32 STR 673] was also considered. In the said case, it was held by the Delhi High Court that Section 65(105)(g), (zzd), (zzh), (zzq) and (zzzh) were good enough to tax indivisible composite works contract and that even when rules are yet to be framed for computation of taxes, taxes would be leviable. This proposition was based on the judgment in Mahim Patram (P) Ltd. vs. Union of India [(2007) 3 SCC 668]. It was observed that in G.D. Builders (supra) there was a misreading of Mahim Patram (supra) which was a case related to tax under the Central Sales Tax Act; that in Mahim Patram (supra), it was observed that u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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." It was categorically observed that since the Finance Act, 1994 lays down no charge or machinery to levy and assess service tax on indivisible composite works contract, therefore, service tax was not existent at all under the Act and hence any exemption qua service tax "levied" did not arise at all. (8) As already noted, the definition of works contract was brought under the service tax net as per Section 65(105)(zzzza) of the Finance Act, 1994 by the insertion of the said definition. The said introduction was made pursuant to the Finance Act, 2007, which expressly made the service element in such works contract liable to service tax w.e.f. 1st June, 2007. By the said amendment, works contract which were indivisible and composite could be split so that only the labour and service element of such contracts would be taxed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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