Custom, Excise & Service Tax Tribunal
Eta Engineering Private Limited vs Delhi - I on 7 June, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 4
SERVICE TAX APPEAL NO. 50979 OF 2017
[Arising out of OIA-DLI-SVTAX-001-COM-041-16-17 dated 27/01/2017 passed by
Commissioner of Customs, Central Excise & Service Tax- DELHI-I]
ETA ENGINEERING PRIVATE LIMITED .....Appellant
ETA House, B-13,
Sector-63, Noida,
U.P.-201307
VERSUS
COMMISSIONER OF CENTRAL EXCISE-DELHI-I .....Respondent
17-B, I.A.E.A. House, I.P. Estate, MG Marg, New Delhi-110002 APPEARANCE:
Shri Bimal Jain, Advocate for the Appellant Shri Jayakumari, Authorized Representative for the Respondent CORAM: HON'BLE MR. RAJU, MEMBER (TECHNICAL) HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) FINAL ORDER NO. 55924/2024 DATE OF HEARING: 13.03.2024 DATE OF DECISION: 07.06.2024 RAJU This appeal has been filed by M/s. ETA Engineering Private Limited against confirmation or demand of service tax, interest and imposition of penalty under section 77 and 78.
2. Learned counsel pointed out that the appellant are engaged in providing on installation and commissioning work of air conditioning system at hospital complex for 'AIIMS Rishikesh' Uttrakhand. The appellant had entered into agreements with DMRC for design, manufacture, supply, installation, testing and commissioning of Environmental Control System (ECS) and/or Tunnel Ventilation System (TVS) of various underground metro stations in Delhi. They were also engaged in providing services to AIIMS through M/s. JMC Projects (I) Limited. The demand in respect of the services provided to DMRC was dropped by the Original Adjudicating Authority, Page |2 ST/50979/2017-DB however, the demand relating to the service provided to AIIMS through JMC Projects was partly confirmed.
2.1 Learned Counsel pointed out that the demand relating to the services provided to AIIMS was dropped for the period after 01.07.2012 by granting benefit of the entry no. 29(h) of the mega notification no. 25/2012-ST dated 28th June, 2012. However, the demand pertaining to the period 2011-2012 and from April, 2012 to June, 2012 has been confirmed. He pointed out that while allowing the benefit of Notification No. 25/2012-ST the impugned order holds that AIIMS Rishikesh falls under the description 'Governmental Authority'. Learned counsel relied on the CBEC instruction no. F.No.B1-16- 2007/TRU dated 22.05.2007 wherein para 9.10 following has been stated.
"9.10 Contracts which are treated as works contract for the purpose of levy of VAT/sales tax shall also be treated as works contract for the purpose of levy of service tax. This is clear from the definition under Section 65(105)(zzzza)."
2.2 He argued that the service provided by them is not in the nature of erection, commissioning and installation, but it is the service in the nature of works contract service as the contract was inclusive of all material. Learned counsel also relied on the circular no. 80/10/2004-ST dated 17th September, 2004 to assert that generally government buildings for civil constructions are used for residential / office purpose or for providing civic amenities. He pointed out that the circular clearly holds that such government construction would not be taxable. He relied on the decision of tribunal in the case of Shirke Constructions Technology Private Limited 2014 (33) STR 77 (Tri.- Mumbai).
2.3 He further argued that the demand is beyond the normal period of limitation and there was absolutely no malafides pointed out in the proceedings. He argued that the issue involved a matter of interpretation and in such cases extended period cannot be involved.
2.4 Learned counsel also argued that the extended period of limitation has been wrongly invoked as the issue of classification is purely question of law. He argued that the appellant is fully justified and believing that this is a works contract and did not attract classification as erection, commissioning or installation service.
3. Learned DR relied on the decision of tribunal in the case of Kehems Engineering Private Limited 2016 (41) STR 307 (Tri. Del.).
Page |3 ST/50979/2017-DB
4. We have considered rival submissions. We find that it is not in dispute that the appellants had provided environment controls related work on turnkey basis to AIIMS through the main contractor namely JMC. The scope of work stated in the show cause notice is as follows:
HVAC and BMS work which includes designing, supplying, erection, testing and commissioning of the entire system. Any civil work, not covered under BOQ/Specifications shall be executed by the JMC. The related civil works covered in specification, for the HVAC and mechanical ventilation work shall be in the scope of ETA.
Internal coordination with associated agencies and external authorities for testing/approval.
The related shop/working drawings and the necessary approvals required before the execution of the works is included in the scope of work.
AMC & Operation part will not be a part of contract and will be taken care by ETA directly with AIIMS after completion of work.
From the above it is apparent that the job involved not only erection and commissioning but also supply in goods. In that context the service becomes classifiable as works contract service.
5. Learned AR has relied on the decision of Tribunal in the case of Kehems Engineering Private Limited (supra). It is noticed that the said decision is based on the divisibility of the work contract into supply and service. The said view was approved by the five member larger bench of CESTAT in the case of Larsen and Toubro Limited 2015 (38) STR 266 (Tri. Larger bench). It is noticed that the said decision of large bench was upset by Hon'ble Apex Court 2015 (39) STR 913 (SC). Thus, the decision in Kehems Engineering Private Limited is no longer valid.
5.1 From the show cause notice it is seen that the arrangement between the JMC and the appellant for the project relating to AIIMS Rishikesh was on following terms:
(i) Project cost sheet showing separately working of material and labour portion;
(ii) Running Account Bill-wise details showing separately material portion, VAT amount and labour portion charged on actual basis from M/s JMC Projects (India) Private Limited;
(iii) Local VAT challans including WCT-TDS Certificate towards payment of VAT liability;
Page |4 ST/50979/2017-DB
(iv)Local VAT returns mentioning taxable turnover comprises of running account bills, as approved by JMC India; and
(v) Ledger account of JMC Projects (India) Ltd for the period FY 2010-11 to FY 2013-14 (upto 03.02.2014).
From the above it is seen that the appellants were paying VAT under works contract service and deducting TDS as well.
6. It is notice that in the show cause notice in pare 7, it is alleged that with the fact from 01.07.2012 the service would be classifiable under the works contract service as defined under section 65B (54) of the Finance Act, 1994 but, in para 12 of the said show cause notice, it also alleges that service provided by the appellant is under 'erection, commissioning and installation' under section 67 of the said Act.
The definition of the works contract service reads as under:
"S.65(105)(zzzza) "taxable service" means any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. -For the purposes of this sub-clause, "works contract" means a contract wherein,
(i) 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 of carrying out, -
(a) erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fireproofing or water proofing, lift and escalator, fire escape staircases or elevators; or
(b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or
(c) construction of a new residential complex or a part thereof; or
(d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or
(e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects"
It is seen that the definition of works contract service at the material time specifically included "erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of Page |5 ST/50979/2017-DB electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation and air conditioner"
Thus, there was no doubt that the said service was taxable. Moreover, there was no exemption to this category of service if provided for purposes other than 'commerce or industries'. The appellants have paid VAT under works contract. Thus, we hold that the said service provided by appellant was taxable. The appellants have shown that there was exemption for period after 01.07.2012 but for period prior to that no exemption has been shown. Thus demand for the period prior to 01.07.2012 has rightly been confirmed.
7. As regards the issue of limitation the appellants has contended that it was an issue of interpretation. We find that for period prior to 01.07.2012 there was absolutely no doubt as the service was specifically covered in the definition itself. There was no scope of as doubt. Thus, we do not find any merit in the defense of the appellant.
8. The appeal is therefore dismissed.
(Dictated and pronounced in the open Court 07.06.2024) (RAJU) MEMBER (TECHNICAL) (DR. RACHNA GUPTA) MEMBER (JUDICIAL) Dharmi