INSTRUMENTATION LTD. Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) HEARD both sides on the stay petition.

(2.) The applicants have entered into contracts for turn key projects for installing processing control systems for various other customers. The department has held that the charges contributable to engineering charges, erection and commissioning charges are liable to service tax and accordingly demanded Service tax amounting to Rs. 40,71,946/ - besides imposition of penalties under various sections.

(3.) THE learned Advocate for the applicants submits that they have entered into the composite contracts for the purpose of handing over a functional system; the price break -up given in the contract is just to enable progressive release of payments. The designing, if held to be a service, it is rendered to themselves as they are ultimately to hand over a functional system to their clients. Therefore, vivisecting for the purpose of charging to service tax prior to 1 -6 -2007 when the work contracts itself liable to become service tax is not permissible. He also submits that the demand of service tax included not only in respect of their Kota unit, but also in respect of other 4 to 5 units situated outside the jurisdiction of Commissioner, Jaipur. The demand attributable to their Kota unit is about Rs. 10,00,000/ -. He further submits that the Department was aware of the nature of activities undertaken by the applicant unit and, therefore, invoking extended time limit by issuing of show cause notice dated 28 -1 -2005 for demanding duty relating to December 2004 is not justified.