F K Enterprise VERSUS C.C.E. & S.T.-Vadodara-i

SERVICE TAX Appeal No. 190 of 2012-DB

[Arising out of Order-in-Original/Appeal No COMMR-A–30-VDR-I-2012 dated 19.01.2012

passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-VADODARA-I]

 

F K Enterprise

VERSUS

C.C.E. & S.T.-Vadodara-i

APPEARANCE:

Shri Dhaval K Shah, Advocate for the Appellant

Shri. Vijay G. Iyengar, Superintendent (Authorized Representative) for the

Respondent

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

HON’BLE MEMBER (TECHNICAL), MR. RAJU

FINAL ORDER NO.A / 10220 /2023

DATE OF HEARING: 17.01.2023

DATE OF DECISION: 07.02.2023

RAMESH NAIR

The brief facts of the case are that the Appellants are registered with

the Service Tax cell under the category of “Works Contract”. The

Appellants have been providing the service of painting work to various

industrial and commercial clients. The nature of service to be provided to the

client as mentioned in some of their Work Orders/ Purchase Orders/ Contract

is reproduced below:

a……….”Providing & applying two coats of heat resisting

painting including scraping and cleaning”

b……..”One coat zinc enamel primer & two coats of synthetic

enamel paints including scraping & cleaning on pipeline

work”

Most of other work orders which contain description of nature of services

are of similar nature as mentioned above. The Appellants are providing such

services to various commercial and Industrial clients. For industrial clients,

they are also undertaking painting work on equipment and pipelines etc.

The case of the Department is that the appellant is carrying out services

of Repair or Maintenance and Commercial or Industrial Construction Relating

to Painting on Walls, Buildings, and Sheds etc. The contention of the

Department is that these activities covered under “Works Contract” service

only if it is carried out in respect of construction of new building or construction

of new residential. Since, this activities were carried out on the old building,

the same is not covered under works contract service in terms of the definition

of “works contract” as per clause ii (b)(c) & (d). Therefore, the appellant is

liable to pay the deferential duty.

Shri Dhaval K Shah, Learned Advocate appearing on behalf of the

appellant invited out attention to the definition of “works contract” and

submits that the activities of the appellant is covered under clause (d)(ii) of

Clause ii of definition of works contract service under Section 65(105) (zzzza)

of Finance Act, 1994. As the said activities is not only fall under works contract

in respect of new building, but other civil structure and part thereof also when

the same is primarily for the purpose of commerce or industry. There is no

dispute that this activity of painting was carried out on the existing plant,

building machinery which is for the purpose of commerce and industry.

Therefore, the same is covered under works contract and appellant has rightly

discharge the service tax. Therefore, the appeal be allowed.

Shri Vijay G. Iyengar, Learned Superintendent (Authorized

Representative) appearing on behalf of the revenue reiterates the finding of

the impugned order.

We have carefully considered the submissions made by both the sides

and perused the records. We find that the appellant admittedly carried out

repairing/painting work in respect of plant, machinery, and building of their

client. The service was provided along with the material used for painting work

and the appellant also paid the VAT on the works contract. The only ground

for denial of the payment of Service Tax under the works contract by the

revenue is that the same is not covered under definition of works contract as

provided under Section 65 (105)(zzzza) Finance Act, 1994, which reads as

under:

“Works contract”, for the purpose of section 65(105)

(zzzza), means a contract wherein,-

(i) transfer of property in goods involved in the execution

of such contract is leviable to tax as sale of goods, and

(ii) such contract is for the purposes of carrying out,-

(a)

Erection, commissioning or installation of plant, machinery,

equipment or structures, whether pre-fabricated or

otherwise, installation of electrical and electronic devices,

plumbing, drain laying or other installations for transport of

fluids, heating, ventilation or air conditioning including

related pipe work, duct work and sheet metal work, thermal

insulation, sound insulation, fire proofing or water proofing,

lift and escalator, fire escape staircases or elevators; or

(b)

Construction of a new building or a civil structure or a part

thereof, or of a pipeline or conduit, primarily for the purpose

of commerce or industry; or

(c)

Construction of a new residential complex or a part thereof;

or

(d)

Completion and finishing services, repair, alteration,

renovation or restoration of, or similar services, in relation

to (b) and (c); or

(e)

Turnkey projects including engineering, procurement and

construction or commissioning (EPC) projects;”

On reading of the above definition of works contract, we find that to cover the

appellant’s activity under works contract it is not necessary that the said

activity should be carried out only in respect of new building. As per clause

(b) in addition to construction of a new building there is another category “Civil

structure and part thereof” primarily for the purpose of commerce or industry.

This category is a very vast category, which covers the plants machinery

building. The appellant has carried out the painting work on this plant,

machinery, building. As regard this category there is no condition that such

as civil structure or part thereof should be new. The clause (d) clearly specifies

that any activity which is used for completion and finishing services, repairing,

renovation or restoration or similar services in relation to (b) and (c) are

covered under works contract service. The painting is clearly covered under

term finishing service, repair, renovation or similar service. Since we stated

above that a civil construction or a part thereof covers the plant machinery,

building on which the appellant has carried out the painting work, the same is

specified under clause (b) therefore, the painting work carried out on a civil

structure or part thereof and also of a pipe line or conduit and undisputedly it

is for the purpose of commerce or industry. The activity of the appellant is

squarely covered under the definition of “works contract”. Therefore, we are

of the considered view that the appellant have correctly discharged the Service

Tax under the head of works contract.

Accordingly, the impugned order is not sustainable, hence the same is

set aside, appeal is allowed.

(Pronounced in the open Court on 07.02.2023 )

RAMESH NAIR

MEMBER (JUDICIAL)

(RAJU)

MEMBER (TECHNICAL)