Service Tax - Works Contract prior to 1.6.2007 - Issue referred to Third Member - CESTAT
CAN a works contract be vivisected prior to 01/06/2007 and subjected to levy of Service Tax under "erection, installation and commissioning”. This was the 213 Crores rupees question before the CESTAT - of course you have to add the equal penalty and interest and other penalties, which would make it around Rs. 500 Crores.
In the CESTAT, there was difference of opinion between the Member (T) and Member(J).
Member (T) held that a works contract can be vivisected even prior to 01/06/2007 and the service portion discernible in the contract can be subjected to levy of service tax and in the present case, since the discernible service is "erection, installation and commissioning", the said activity is leviable to service tax under section 65 (105) (zzd) read with section 65 (39a)/65 (28) as they stood at the relevant time prior to 01/06/2007 and under Section 65 (105) (zzzza) on or after 01/06/2007.
He relied on:
1. the decision of the Larger Bench of the Tribunal in the case of BSBK Pvt. Ltd . -
2. Tamil Nadu Kalyana Mandapam Association -
3. Nagarjuna Construction Co. Ltd. vs. Govt. of India -
But the Member(J) held that a works contract cannot be vivisected prior to 01/06/2007 and subjected to levy of Service Tax under "erection, installation and commissioning". He relied on:
1. Jyoti Ltd Vs CCE, Vadodara -
2. Indian Oil Tanking Ltd -
3. Apex Court in Govind Saran Ganga Saran Vs Commissioner of Sales Tax -
And so the matter is now to be heard by a Third Member. Hopefully, till such time the Third Member's decision comes, CESTAT will liberally grant waiver of pre-deposit in such cases.
We will bring you the order as soon as possible.