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Services of Erection, Commissioning or Installation Service (ECIS)

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Service Tax - Assessee providing services of Erection, Commissioning or Installation Service (ECIS) to M/s BSNL in the form of erection of towers for which certain items are supplied free of charge by BSNL and certain other items are used by the appellants - what should be the classification of the activities undertaken by the appellants, whether the same should be considered Erection, Commissioning or Installation Service (ECIS) or as works contract service. Period of dispute in all these appeals is 1/5/2006 to 17/3/2008

HELD - We do not agree with the argument of the appellant that no service tax was attracted on the activities done by them prior to 01/6/2007 as the works contract service was carved out of Services of CICS, COCS and ECIS which were subject to service tax even prior to 01/6/2007. Works contract service was specifically born w.e.f. 01/6/2007. As per the provisions contained in Section 66F (2) of the Finance Act, 1994 a specific heading has to be the appropriate classification of a service.

The activities of ‘works contract’ undertaken by the appellant is therefore classifiable under ‘works contract service’ w.e.f. 01/6/2007. The same service even if provided under a works contract before 01/6/2007, will be classifiable under Erection, Commissioning or Installation Service (ECIS). A similar view was expressed by five Member Larger Bench in the case of Larsen & Toubro Ltd. vs. CST, Delhi - Extended period - there could be a bonafide belief on the part of the appellant that their activities do not attract service tax before 01/6/2007. Accordingly, it is held that extended period is not invokable in these appeals - As appellants had a bonafide belief that no service tax was payable by them before 01/6/2007, as ‘works contract service’, there is a reasonable cause for non-payment of tax and benefit of Section 80 of the Finance Act, 1994 is admissible. Accordingly, it is held that no penalites under Section 76, 77 and 78 are imposable upon the appellants in these proceedings - In the absence of any demands under ‘Works Contract Service’ for the period after 01/6/2007, appeals filed by the appellants to that extent are required to be allowed – Appeals filed by the Revenue are dismissed

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