LANCO INFRATECH LTD. Vs. COMMR. OF CUS., C. EX. & S.T.
LAWS(CE)-2015-2-49
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on February 03,2015

LANCO INFRATECH LTD. Appellant
VERSUS
Commr. Of Cus., C. Ex. And S.T. Respondents

JUDGEMENT

B.S.V. Murthy, Member (T) - (1.)THE appellant has undertaken work comprising of various civil works relating to construction of Hydro Power Projects in Himachal Pradesh, Sikkim, Uttarakhand, etc. The appellant had entered into contracts for execution of certain civil works with M/s. Lanco Green Power Private Ltd., M/s. Lanco Energy Pvt. Ltd., etc. The scope of work in each of these contracts, inter alia, includes various activities like preliminary site activities, bus bush clearance. Topographical survey, construction of approach roads, temporary buildings, tunnels, coffer dams, underground power house tunnels, transformer tunnels, etc. The value of contract is fixed at a lump sum amount for the scope of the work defined in the contract. However, the appellant had paid Service Tax only on the items representing Erection, Commissioning, Transportation of equipment and did not pay Service Tax on the value relating to Tunnels, Roads, Dams, etc. The appellant did not pay the tax believing that work relating to construction of Tunnels, Roads, Dams, etc., are excluded from the definition of 'Commercial or Industrial Construction Services' as per Section 65(25b) of the Finance Act, 1994. Taking a view that the appellant could not have vivisected a single contract into different components and claim of exemption on that part of the amount received towards construction of Tunnels, Roads, Dams, etc., is not in order, proceedings were initiated. The learned Commissioner took the view that the essential character of the work is commercial construction and therefore, the appellant is required to pay Service Tax on the balance amount received for which exemption has been claimed.
(2.)AS a result of proceedings initiated, impugned order has been passed confirming demand for Service Tax of Rs. 8,97,85,818/ - with interest for the period from July, 2009 to March, 2010 and imposing penalty on the appellant.
Heard both the sides.

(3.)THE activities on which Service Tax was not paid by the appellant related to roads, tunnels and dams and the objective was primarily not Commercial or Industrial. Whether a contract can be vivisected is a question of fact that has to be determined based on the details available in the contracts. Learned Counsel draws our attention to the definition of 'Commercial or Industrial Construction Services' and relies upon C.B.E. & C. circular dated July 27, 2005 to submit even if the contract is single composite contract, segregation or demarcation between the portion relating to Construction of Roads and other constructions, is allowed. Therefore, appellant's method of assessment and payment of tax on taxable portion is in accordance with law.
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