Case Law Details
Bhaskar Contractors Vs Additional Commissioner Central Excise & Service Tax (Delhi High Court)
Delhi High court held that in case there is supply or deemed supply of goods and rendering service, the same will fall within the ambit of works contract service regardless of whether or not VAT or service tax is payable.
Facts- Based on the statements of the appellant and the information received from the clients, the department found that the appellant had provided repair and maintenance services, erection commissioning and installation service and manpower recruitment and supply service during the period. As the appellant stated that he had collected service tax and not deposited and had not maintained any ledgers or balance sheets and had also not maintained the invoices, based on the Forms 26As provided by the appellant and the Forms 16A and other details obtained from the clients of the appellant, a Show Cause Notice dated 4.2.2013 was issued to the appellant demanding service tax invoking extended period of limitation and proposing to impose penalties.
This SCN was adjudicated upon by the Additional Commissioner who passed the OIO dated 25.5.2015 which was affirmed in the impugned order.
Conclusion- No VAT may be payable on some goods under the state laws but that does not convert the Works Contract Service into a pure service contract. Conversely, if no service tax is payable on the service portion of some types of works contracts, they do not automatically become contracts for sale of goods. The nature of the contract has to be examined and if it involves supply or deemed supply of goods and rendering service, it will be a Works Contract Service regardless of whether or not VAT or Service tax is payable. The appellant‘s contention that some of the contracts were Works Contracts must be examined by the original authority.
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