M/S Klaus Multiparking Systems Pvt. Ltd vs Cce Pune Iii

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II

APPEAL NO. ST/238/09

Arising out of Order-in-Appeal No. PIII/VM/105/09 dated 20.07.2009 passed by the Commissioner of Central Excise (Appeals), Pune III.

For approval and signature:

Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri P.S.Pruthi, Member (Technical)

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

M/s Klaus Multiparking Systems Pvt. Ltd. : Appellant

Versus

CCE Pune III

Respondent

Appearance

Shri Ankit Shah, Advocate for appellant Shri S.V.Nair, Supdt (A.R.) For Respondent

CORAM:

Shri M.V. Ravindran, Member (Judicial) Shri P.S. Pruthi, Member (Technical)

Date of Hearing : 09.04.2015 Date of Decision : 09.04.2015

ORDER NO.

Per P.S. Pruthi This appeal is directed against the impugned order in appeal number 105/09 dated 20.7. 2009 passed by the Commissioner Appeals Pune upholding the rejection of the refund claim filed by the appellant.

2. The appellant is involved in supply and erection of car parking systems for projects of M/s Raheja Developers, M/s, Padmavati Developers, M/s Amrit Sidhi Developers etc. Revenue found this activity to be covered under the Erection, Commissioning or Installation service. The appellant paid service tax for the period 1.10.2003 to 31.03.2005 in instalments during September 2005, November 2005, March 2006, and March 2006, under protest. Later, on 12.12.2006 appellant filed a refund claim on the ground that the activity was covered under the Works Contract Act of Maharashtra government which was in existence till 31.3.2005 and since levy of service tax on Works Contract came into force after 31.3.2005, they are not liable to pay service tax. Therefore they filed a refund claim on 12.12.2006. The adjudicating authority held that tax is leviable on the service component of their activity and the appellant was free to avail the benefit of Notification No. 19/03 which allows rebate of 67% on the value charged for supply and erection. The adjudicating authority also held that the activity is covered under the category of erection, commissioning or installation. The refund claim was accordingly rejected. In appeal, the Commissioner (Appeals) upheld the decision of the adjudicating authority. Appellant are in appeal against this order of Commissioner (Appeals).

3. The first contention of the Ld Counsel for the appellant is that they are involved in the erection of structures. Service tax was levied on Commissioning or installation service on 1.7.2003. Commissioning or installation was defined as a service provided by a commissioning and installation agency in relation to commissioning or installation of plant, machinery or equipment. This definition was amended in October 2004 to the effect that for the words in relation to commissioning or installation, the words in relation to erection, commissioning or installation were substituted. Further, in May 2006, the definition was further amended to the effect that for the words machinery or equipment, the words machinery, equipment or structures, whether prefabricated or otherwise were substituted. The argument is that the activity of supply and erection of car parking systems amounts to erection of a structure which became leviable to service tax only in May 2006. In support of this contention they referred to para 3 of show cause notice, para 2(3) of their reply to show cause notice, para 3 and para 8 of order-in-original and para 5 of the order in appeal--- all of which refer to the activity as supply and erection of structures. The Ld counsel referred to the bills raised by them which are for supply and erection of car parking systems. He also referred to the dictionary meaning of structure which reads as  that which is built or constructed; an edifice or building of any kind. Poles connected by wires for the transmission of electricity. This definition shows that what has been erected by them is a structure.

4. The learned AR appearing for revenue reiterated the findings of the Commissioner. He argued strongly that the activity undertaken by the appellant amounts to erection of equipment because the car parking system includes hydraulic systems for shifting the cars for parking purposes.

5. We have carefully gone through the facts and considered the submissions made by both sides. The appellant were paying tax prior to 31.03.2005 to the State government under the Works Contract Act. Therefore the argument is that since service tax on Works contract came into effect after 31.3.2005, their activity is not covered under the service category of erection commissioning or installation. We note that the larger bench of the Tribunal in the case of Larsen and Toubro Ltd.  2015 (38) STR 266 (Tri. LB) has held that vivisection of Works Contract was permissible before the introduction of service tax on Works Contract service. If the service component of an activity was covered under any other category of service under the Finance Act 1994, it would be leviable to service tax. Therefore we do not agree with this contention of the appellant.

6. However we note that the word erection was included in the definition of Commissioning or Installation in October, 2004. Further, erection of structures was introduced in the definition of erection commissioning or installation for the first time in May 2006. There is merit in the contention of the appellant that what has been erected by them is basically a structure. At the same time, on a query from the bench, it was revealed that the multi-parking car system also includes hydraulic systems/ lifts. Therefore it has to be examined whether the whole parking system can be termed as a structure or it should be considered as having two components namely a civil structure and the hydraulic/lift system. We find these factual details have not been examined by the adjudicating authority or the appellate authority with reference to the definition of erection, commissioning or installation as it underwent amendments from 2003 to 2006. The matter, therefore, needs to be remanded back to the adjudicating authority for a careful analysis of facts vis-a-vis the statute prevailing at the relevant time.

7. Appeal allowed by way of remand to adjudicating authority. All issues kept open.

(Operative part pronounced in Court)

(M.V. Ravindran) Member (Judicial) (P.S. Pruthi) Member (Technical)

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