Service Tax - Works Contract prior to 1.6.2007 - Matter goes to Five Member Bench of CESTAT
CAN a works contract be vivisected prior to 01/06/2007 and subjected to levy of Service Tax under "erection, installation and commissioning", "commercial or industrial construction", "construction of residential complex service" ?
In the following two cases, Tribunal had held that in the absence of works contract service having been enumerated as an independent taxable service prior to 1.6.2007, a service provided which is essentially in the nature of a works contract cannot be brought to tax under other, existing taxable services.
1. Jyoti Ltd. Vs. CCE - and
2. CCE Vs. Indian Oil Tanking Ltd. -
Both the above cases were decided on majority opinion after reference to Third Member.
In CCE Vs. BSBK Ltd. - (2010-TIOL-646-CESTAT-DEL-LB), a Larger Bench of the CESTAT held that Turnkey contracts can be vivisected and the discernible service elements therefore could be segregated and classified for levy of service tax.
Recently the Tribunal in Larsen & Toubro Ltd vs Commissioner of Service Tax, Mumbai - referred to the Third Member the question whether 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.
Now, a Division Bench of the CESTAT has referred the matter to a Larger Bench of five Members, as there are conflicting views among Larger Bench decisions.
Is a Third Member Decision equal to a Larger Bench Decision?: Tribunal held it is so and therefore the two Third Member decisions are also taken as Larger Bench decisions.
We will bring you this order tomorrow.
The following may be of interest.
1. The Daelim dilemma!
2. NO SERVICE TAX ON COMPOSITE CONTRACT
3. Service Tax on composite contract - Whether leviable?
4. Post CBEC Circular on Service Tax - Are works contractors liable at all?
5. Service Tax : The fine dividing line between indivisible contract and composite contract
6. Growing ambit of Works Contract as a taxable service