The Braithwaite Burn And Jessop Construction Company Limited Vs Commissioner of Service Tax-II (CESTAT Kolkata)
Conclusion: Composite contracts involving supply of materials could not be taxed under construction or other service categories and only the service portion was liable to tax.
Held: Assessee – a Public Sector Undertaking was engaged in execution of infrastructure projects, was issued a show cause notice dated 15.10.2012 demanding service tax for the period 2007–08 to 2011–12 under multiple taxable categories along with interest and penalties by invoking the extended period of limitation. The demands pertained to services rendered to entities such as BHEL, SAIL, Chittaranjan Locomotive Works (CLW), and Rajendra Agricultural University (RAU), along with disallowance of CENVAT credit. Adjudicating authority confirmed the demand, leading to the present appeal. The issue arose for consideration was whether composite contracts involving supply of goods and services were classifiable under “Works Contract Service” or other taxable categories like CICS, ECIS, or Consulting Engineering Services. It was held that contracts executed for BHEL, SAIL, CLW and RAU involved supply of materials along with services, thus constituting composite works contracts. In light of the Supreme Court ruling in Larsen & Toubro, such contracts could not be vivisected and taxed under categories like CICS or ECIS. Consequently, demands raised under Commercial or Industrial Construction Service (CICS) and Erection, Commissioning & Installation Service were legally unsustainable.
