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Works Contract Services

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CESTAT, NEW DELHI BENCH

Alstom Projects India Ltd. (vs) Commissioner of Service Tax*, Delhi

Section 65(105)(zzzza) of the Finance Act, 1994 - Works contract service - Period 1-3-2001 to 15-12-2005 - Whether where work contract is an indivisible works contract for a particular service and said service is taxable under section 65(105), service tax will be chargeable; in such cases question as to whether work contract is divisible or indivisible is irrelevant - Held, yes - Whether question of vivisection of an indivisible work contract is relevant only in context of charging sales tax on transfer of property in goods involved in providing of service, for which by 46th Constitutional Amendment, article 366(29A) containing extended definition of 'Tax on sale or purchase of goods' has been introduced, but there is no need to invoke legal fiction of article 366(29A) for charging service tax on works contract - Held, yes - Whether for period prior to 1-6-2007 i.e., when levy of tax on service of works contract came into force, if a works contract was an indivisible service contract, whether or not involving use of goods which get consumed or get passed in to service receiver either as such or in changed form, and said service is taxable, works contract would attract  service tax and if work contract was a composite contract involving sale of goods and one or more services and those services were taxable, service tax would be chargeable on value of these services - Held, yes - A consortium led by assessee was awarded a contract by DMRC for design, manufacture, supply, installation, testing and commissioning of train control, signaling and telecommunication system for some particular stations of Delhi Metro - As per contract with DMRC whole contract was divided into different sections and each section were divided into five different cost centers, namely, A, B, C, D & E - Cost centres A,B,D and E covered pure service activity and cost centre C covered supply of equipments and accessories to be installed - Each cost centre was further divided into ;milestone' which were nothing but various items of equipments, machineries and accessories in cost centre C - Payments were made on each milestone basis - Whether impugned contract was for sale as well as for service and it was not an indivisible contract and service tax would be charged on its service component - Held, yes [Paras 4.,1 4.4-1, 5.2, 4.5-2, 4.5-5 and Para 6.1]
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