Services on Works Contract

CESTAT, BANGLORE BENCH
B. Rama Rao & Co. (vs.) Commissioner of Customs, Central Excise & Service Tax*, Hyderabad-IV
Section 65(105)(zzzza) of the Finance Act, 1994 – Works contract service – Period 10-9-2004 to 31-3-2008 – Stay order – Whether there is nothing in any provision of Act, from which it can be inferred that taxable services, as defined in various clauses of section 65(105), have to be pure services not involving use or supply of any goods or that such services would not be taxable if same involve use or supply of any goods or materials – Held, yes – Whether question of vivisection of an indivisible works contract is not relevant at all in context of charging service tax which would be attracted if contract is for a taxable service; in fact, for period prior to 1-6-2007, when there was no definition of term ‘works contract’ on Act, it would be incorrect to treat this term as representing something other than a normal service contract – Held, yes – Service tax demand was confirmed on assessee for relevant period under categories of ‘Commercial or Industrial construction service’, ‘Construction of compiles service’ and ‘Works contract service’ – Assessee submitted that above services were provided by it as works contract, which involved transfer of property in goods, on which sales tax/VAT had been paid, and, therefore, these services were not taxable during period prior to 1-6-2007 and same became taxable with effect from 1-6-2007 under section 65(105)(zzzza) under category of works contract service – Whether prima facie services provided by assesse were taxable even during period prior to 1-6-2007 on which, admittedly, no service tax had been paid and, therefore, assessee was to be directed to pre-deposit part of demand – Held, yes [Paras 5.4, 5.5 and 6] [Stay partly granted]