3 M India Limited Vs Commissioner of Central Excise (LTU) (CESTAT Bangalore)
In 3 M India Limited Vs Commissioner of Central Excise (LTU), the CESTAT Bangalore examined whether differential service tax could be demanded by reclassifying services already taxed under “Erection, Commissioning or Installation Service” as “Works Contract Service.”
The appellant was registered with the Service Tax Department for providing services including erection, commissioning and installation services, and maintenance and repair services. During scrutiny of ST-3 returns for the period ending September 2010, the Department observed that the appellant had executed a project for Delhi PWD relating to the Commonwealth Games, 2010 involving supply and installation of retro reflective road signages in New Delhi. According to the Department, the services should have been taxed under Works Contract Service (WCS) at 4% instead of 2%, resulting in a differential service tax demand of ₹25,53,687 along with interest and penalty. A show cause notice dated 19.09.2011 was issued, and the demand was subsequently confirmed by the adjudicating authority and upheld by the Commissioner (Appeals).
Before the Tribunal, the appellant submitted that the work was executed under a Consortium Agreement dated 29.08.2009 involving M/s. Bajaj Electricals Limited and M/s. CBM Industries Limited. Under the agreement, the appellant acted as consortium leader and supplied 3M films and VHB tapes, while other consortium members handled fabrication, erection, installation, and procurement of materials for sign boards.
