Case Law Details
Sahni Electric Works Vs Commissioner of Service Tax (CESTAT Delhi)
Undisputedly Electric motor winding job required both winding of the motors and also using the materials required for such service. Thus, it was a composite works contract which involved both rendering service and supplying material. The Revenue also does not dispute that it is a composite contract. However, there is a break up in the contract and 20% of the total amount received is attributed by the Delhi Jal Board towards services and 80% towards material. The appellant has paid service tax on 20% and VAT on the 80% of the amount. Under these circumstances, we find that the demand of service tax on the 80% of the value of the contract attributed towards the goods cannot be sustained. We also find that the issue is squarely covered in favour of the appellant by the decision of this Tribunal in Raj Engineering and National Pump Services. At any rate, if the contract is for a composite works contract, it should be treated as a separate species of contract and it is chargeable to service tax only under the head of “works contract service” as per the judgment of Supreme Court in Larsen & Toubro7. The definition of “works contract service” under Section 65 (105) (zzza) does not include works contract towards winding of motor. For that reason also the demand cannot be sustained.
Contract for maintenance and management of the arrangement for pumping water cannot be called called supply of tangible goods, even if it includes use of Diesel Genset by Service Provider
we find from the work orders enclosed in the appeal paper book that the contract was not given by the Delhi Jal Board to the appellant to supply diesel Gensets although they were an important component of the contract. Supply of Diesel Genset was not the essence of contract. The essence of contract was making “supplementary arrangements for pumping water during power failure”. This arrangement required the appellant to supply Diesel Gensets, load them, unload them, check their batteries, operate them, connect them to the pump sets, when there is power failure and switch over the pumps back to the main line once the power is restored. Thus, the appellant was required to make the entire arrangements for pumping water when there was power failure. It would have been a different case if the contract was only for supplying Diesel Gensets without transferring effective control and possession. In such a contract, the appellant could not have had the responsibility of connecting and disconnecting the Diesel Gensets as and when the power goes or is restored respectively. In our considered view, this cannot be called supply of tangible goods but is a contract for maintenance and management of the arrangement for pumping water. The appellant has already discharged service tax under the head Management, Maintenance and Repair Services. As far as the cost of diesel, mobile oil, etc. is concerned, these were required for the maintenance, incurred by the appellant and reimbursed by the Delhi Jal Board. Therefore, these reimbursements cannot be called consideration for rendering service. Therefore, the entire demand made in the show cause notice and confirmed in the impugned order towards supply of tangible goods service needs to be set aside and we do so.
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