By TIOL News Service

MUMBAI, JUNE 08, 2015: THE appellant is involved in supply and erection of car parking systems for projects of M/s Raheja Developers, M/s. Padmavati Developers, M/s. Amit Sidhi Developers etc.

Revenue viewed that this activity is covered under the "Erection, Commissioning or Installation" service and chargeable to Service Tax.

The appellant paid service tax for the period 1.10.2003 to 31.03.2005 in installments during September 2005, November 2005, March 2006, and March 2006, under protest. Later, on 12.12.2006 appellant filed a refund claim on the ground that the activity was covered under the Works Contract Act of Maharashtra government which was in existence till 31.3.2005 and since levy of service tax on Works Contract came into force after 31.3.2005, they are not liable to pay service tax.

The adjudicating authority held that tax is leviable on the service component of their activity and the appellant was free to avail the benefit of Notification No. 19/2003-ST which allows rebate of 67% on the value charged for supply and erection. The adjudicating authority also held that the activity is covered under the category of 'Erection, Commissioning or Installation'. The refund claim was accordingly rejected.

As the Commissioner (Appeals) upheld this order, the appellant is before the CESTAT.

After considering the submissions, the Bench noted -

"5. …The appellant were paying tax prior to 31.03.2005 to the State government under the Works Contract Act. Therefore the argument is that since service tax on Works contract came into effect after 31.03.2005, their activity is not covered under the service category of "erection commissioning or installation". We note that the larger bench of the Tribunal in the case of Larsen and Toubro Ltd. - 2015-TIOL-527-CESTAT-DEL-LB has held that vivisection of Works Contract was permissible before the introduction of service tax on Works Contract service. If the service component of an activity was covered under any other category of service under the Finance Act, 1994, it would be leviable to service tax. Therefore we do not agree with the contention of the appellant."

The Bench further observed -

"6. However we note that the word 'erection' was included in the definition of 'Commissioning or Installation' in October, 2004. Further, erection of structures was introduced in the definition of "Erection, commissioning or installation" for the first time in May 2006. There is merit in the contention of the appellant that what has been erected by them is basically a structure. At the same time, on a query from the bench, it was revealed that the multi-parking car system also includes hydraulic systems/lifts. Therefore it has to be examined whether the whole parking system can be termed as a structure or it should be considered as having two components namely a civil structure and the hydraulic/lift system. We find these factual details have not been examined by the adjudicating authority or the appellate authority with reference to the definition of 'Erection, Commissioning or installation' as it underwent amendments from 2003 to 2006. The matter, therefore, needs to be remanded back to the adjudicating authority for a careful analysis of facts vis-a-vis the statute prevailing at the relevant time."

In fine, the Appeal was allowed by way of remand to the adjudicating authority.

(See 2015-TIOL-1052-CESTAT-MUM )