Erection, Commissioning or installation service

CESTAT, BANGLORE BENCH
ABB Ltd. (vs) Commissioner of Service Tax*, Bangalore
Section 65(29) of the Finance Act, 1994 – Erection, Commissioning or installation service – Period 30-11-2004 to 9-3-2007 – Assessee -company had entered into five contracts with Delhi Metro Rail Corporation (DMRC) for design, manufacture, supply, installation, testing and commissioning of electrical, hydraulic & fire systems at some of metro stations of DMRC – Show-cause notice was issued to assessee demanding service tax from it under category of ‘Commissioning and installation services’ – Assessee contested show-cause notice contending that all contracts in question were turnkey contracts and, therefore, were not liable for service tax prior to 1-6-2007 – Adjudicating authority did not agree with contention of assessee and confirmed demand along with interest and also imposed penalties – It was found from records that contracts entered into by assessee with DMRC were registered with sales tax authorities for billing under Delhi VAT Act and VAT liability had been deducted from payments made by DMRC to assessee – It was also on record that  tax was deducted at source from bills raised by assessee as per provisions of law, on execution of said projects, but was of supply of material which were either manufactured by assessee or were procured from outside – Whether discharge of VAT and deduction of TDS by DMRC by taking amount from Running Account Bills of assessee would definitely indicate that said contracts had been considered by both parties as works contracts – Held, yes – Whether, therefore, contention of assessee that leviability of service tax under works contract would be effective only from 1-6-2007 was correct – Held, yes – Whether in view of above findings, impugned order, confirming demand and imposing consequent penalties and interest, was incorrect and was to be set aside – Held, yes [Paras 8 and 10]