Document Fragment View

Matching Fragments

[PER SHRI K. ANPAZHAKAN] The captioned appeals have been filed by M/s. Techno Electric & Engineering Co. Limited and their Managing Director, namely, Mr. P.P. Gupta challenging the demands of service tax along with interest and penalty confirmed against them by the Principal Commissioner of C.G.S.T. and Central Excise, Central G.S.T. Kolkata North Commissionerate vide the Order-in-Original No. 46-47/COMMR/CGST & CX/KOL NORTH/2024-25 dated 30.10.2024.

2. The facts of the case are that M/s. Techno Electric and Engineering Company Limited (hereinafter referred to as 'the appellant-company') is a Public Limited Company registered under the Companies Act, 1956 and is also a Company within the meaning of the Companies Act, 2013 having its corporate office situated at 1B, Park Plaza, 71, Park Street, Kolkata - 700016. The appellant has been engaged in execution of EPC contracts for setting up of Power Plants across India. For handling the various projects across India, it maintains location wise project sites and accordingly, for Service Tax compliance, it obtained multiple Service Tax Registrations bearing Nos. AAJCS4414QSD001 to AAJCS4414QSD093 in various States in India for provision of Works Contract Service, Maintenance and Repair Service, etc. 2.1. The appellant-company, since its inception has been engaged in the execution of turnkey contracts for setting up of Power Plants for various Electricity Distribution Authorities (EDAs) being public utilities. The Customers (EDAs) of the appellant invite Tenders wherein they seek separate itemized quotations in the Tender for (i) supply of equipment/spares and for (ii) Appeal No(s).: ST/75328 & 75329/2025-DB rendition of Services. Further, in the tender for rendition of service, the service portion is again divided into (a) Erection, Installation and Commissioning, (b) Construction and Civil Work and

(xxvi) EPC/Turnkey contracts are divisible contracts for conceptualizing the project, supply of equipment, machinery, infrastructure, services of different nature/categories and a number of other activities which may or may not involve tax liabilities. Only when and to the extent, the transfer of property in goods is involved in the execution of the contract and such transfer of property in such goods is leviable to tax as sale of goods, such projects and contracts become taxable to Service Tax as a Works Contract. The appellant stresses that the Works Contract Appeal No(s).: ST/75328 & 75329/2025-DB is only a part of EPC contracts and it is fallacious to conclude that all EPC contracts are one single Works Contract.

(ix) The appellant further submits that the present matter involves interpretation of law. The issue regarding taxation of EPC contracts is a subject matter of litigation under the State VAT Law as well as under the Finance Act, 1994. Therefore, in such a situation, the allegation of contravention of provisions of law with the intent to evade tax is not at all tenable. The appellant relies upon the following decisions in support of the contention that mala fide cannot Appeal No(s).: ST/75328 & 75329/2025-DB be alleged when the matter involves interpretation of legal provisions :

12.2. In this regard, after going through the various submissions made by both sides, we do not agree with the findings of the Ld. adjudicating authority that the contracts have been artificially separated for tax purposes. We find that the EPC/Turnkey contracts are divisible contracts for conceptualizing the project, supply of equipment, machinery, infrastructure, services of different nature/categories and a number of other activities which may or may not involve tax liabilities. In this regard, it is relevant to note that when transfer of property in goods is involved in the execution of the contract and such transfer of property in such goods is leviable to tax as sale of goods, such projects and contracts become taxable to Service Tax as a Works Contract. Thus, we observe that the Works Contract is only a part of EPC contracts and it is fallacious to conclude that all EPC contracts are one single Works Contract.