ABB LTD. Vs. COMMISSIONER OF SERVICE TAX, BANGALORE

JUDGEMENT

(1.) THIS appeal is directed against the Order -in -original No. 95/2007 Commr. Dt. 30 -11 -2007.

(2.) THE relevant facts that arise for consideration are that the appellants herein are the service provider and are having registration as LTU. The appellants herein entered into five contracts with M/s. Delhi Metro Rail Corporation (DMRC for short) viz. 3E 11, 3E 14, 3E 42, 3E 43 and 3E 46. Contract 3E 11 is for design, manufacture, supply, installation, testing and commissioning of Electrical, Hydraulic and Fire systems for underground Barakhamba Road station on Barakhamba Road -Connaught Place -Dwarka Section of DMR Project. Contract 3E 14 is for design, manufacture, supply, installation, testing and commissioning of Electrical, Hydraulic and Fire systems for underground Mandi House Station and associated Tunnel in section S -4 of East -West Corridor of DMR Project. Contract 3E 42 is for supply, fabrication, installation, testing and commissioning of Electrical, Fire Detection and Suppression Systems of Line 3 of DMR Project. Contract 3E 43 is for supply, fabrication, installation, testing and commissioning of Electrical, Fire Detection and Suppression Systems for Ganeshnagar, Janakpuri, Uttamnagar etc. of Line 3 of DMR Project while Contract 3E 46 is for supply, fabrication, installation, testing and commissioning of Electrical, Fire Detection and Suppression Systems for elevated stations Pragathi Maidan and Indraprastha stations of DMR Project. Under the aforesaid contracts M/s. ABB Ltd., have supplied as well as carried out installation and commissioning of various electrical equipments, fire detection and suppression systems. The scope of the work undertaken include supply and laying of GI conduits with accessories for PA system, communication and signalling system, supply and laying of medium voltage, aluminium conduits/underground insulated and armoured cables, external cabling for lighting, high mass lighting etc. Similarly installation of fire alarm and suppression systems involve providing main fire alarm control panel, associated wirings, smoke detector etc. Fabrication and installation of fire hydrant sprinkler system involve providing electrical and diesel driven hydrant pumps, engine control panel, sprinkler piping, installation of control valves etc. Under all these contracts provision is made for supply of various equipments (supply contracts) as well as for installation, testing and commissioning of such equipments (service portion). The aforesaid contracts are indivisible contracts where the value of the equipment supplied cannot be segregated from the value of the services provided.

(3.) AFTER an investigation carried out by the office of the DGCEI, it was noticed that the appellants are required to discharge the Service tax under the head Commissioning or Installation service during the period 30 -11 -2004 to 9 -3 -2007 on the above referred contracts. After the investigation, a show -cause notice was issued for demand of service tax of Rs. 1,48,84,854/ - (including education cess of Rs. 2,91,860/ -) as detailed in the annexure to the show -cause notice on the ground that the appellants have not discharged the Service tax liability on Commissioning and Installation services and for the appropriation of the amount already paid by them and for also imposition of penalty and demand of interest. Appellants contested the show -cause notice contending that all the contracts in question are turnkey contracts and therefore not liable for Service tax prior to 1 -6 -2007; it was also contended that in terms of above contracts they had undertaken activity of supply, fabrication, installation, testing and commissioning of electrical, hydraulic and fire detection and suppression system in a composite manner. The Adjudicating Authority, after granting an opportunity of personal hearing and after considering oral and written submissions made before him, did not agree with the contentions raised by the appellants and came to the conclusion that the appellants are liable to pay Service tax on the taxable services provided to DMRC under the category of Commissioning and Installation services and coming to such conclusion passed the following order : -