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TMI Blog2024 (10) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing elements both of transfer of property in goods as well as labour and services. Considering the activity carried out by the appellant is prior to introduction of the Works Contract Service and considering the facts and circumstances, the issue is squarely covered by the judgment of the Hon ble Supreme Court in the matter of Larsen Toubro Ltd., hence the appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by the above decision, wherein it is held as under: "24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "12. On a reading of the above definition, it is clear that both prior and after amendment, the value on which service tax is payable has to satisfy the following ingredients: a. Service tax is payable on the gross amount charged :- the words "gross amount" only refers to the entire contract value between the service provider and the service recipient. The word "gross" is only meant to indicate that it is the total amount charged without deduction of any expenses. Merely by use of the word "gross" the Department does not get any jurisdiction to go beyond the contract value to arrive at the value of taxable services. Further, by the use of the word "charged", it is clear that the same refers to the amount billed by the service provider to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the 'gross amount' simply, because of the reason that no price is charged by the assessee/service provider from the service recipient in respect of such goods/materials. This further gets strengthened from the words 'for such service provided or to be provided' by the service provider/assessee. Again, obviously, in respect of the goods/materials supplied by the service recipient, no service is provided by the assessee/service provider. Explanation 3 to sub-section (1) of Section 67 removes any doubt by clarifying that the gross amount charged for the taxable service shall include the amount received towards the taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posite works contracts. This is clear from the very language of Section 65(105) which defines 'taxable service' as 'any service provided". Further, while referring to exemption notifications, it observed: "42. ...Since the levy itself of service tax has been found to be non-existent, no question of any exemption would arise." It is clear from the above that the service tax is to be levied in respect of 'taxable services' and for the purpose of arriving at 33% of the gross amount charged, unless value of some goods/materials is specifically included by the Legislature, that cannot be added." 5. Similarly, in the matter of Sobha Developers Ltd. Vs. Commr. of C. Ex. & Service Tax, Bangalore reported in 2010 (19) S.T.R. 75 (Tri.-Bang.), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra). The impugned order seeks to recover service tax on a portion of the contract amount relating to materials consumed/sold in the course of provision of construction service. As rightly pointed out by the appellant, Clause 29-A of Article 366 of the Constitution provides that tax on the sale or purchase of goods includes, inter alia, 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 which reads as follows :- "(29A) 'Tax on the sale or purchase of goods includes'- (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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