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)
Leave a Reply