Order Date – 16 January 2023

Parties: Rudra Engineering Vs C.C.E. & S.T.-Vadodara-I 

Facts –

• The Appellant, Rudra Engineering was found to be wrongly availed abatement of 67% for calculating the taxable value for payment of service tax as per the provisions of Notification No. 1/2006-ST dated 01.03.2006 as amended. Also found that the appellant have wrongly classified the service rendered as “Installation of thermal insulation” as Works Contract Service.
• Accordingly, a show cause notice dated 8-10-2012 was issued to the appellant for demand of service tax on wrong availment of abatement and demand of service for wrong classification of service and to impose the penalty.

Issue –

• Whether the appellant is wrongly availed abatement and wrongly classified the service rendered as “Installation of thermal insulation” as Works Contract Service?

Order –

• The Tribunal held that Notification No. 1/2006-S.T., dated 1-3-2006 is applicable not only on the supply of plant, machinery or equipment or structures. Besides, it is also applicable on any other material. The Appellant is Commissioning and Installation agency and for providing the taxable services appellant has provided the thermal insulating materials.
• Hence, the Appellant are eligible to the benefit of the Notification No. 1/2006-S.T., dated 1-3-2006.
• It was also held that from the definition of works contract, in clause (a) thermal insulation also mentioned and in the present matter appellant had also paid VAT/ sales tax on goods which is used in installation of thermal insulation. Hence the impugned activity of the appellant was nothing but “works contract service”. No Service tax can be imposed.
• Thus the appeal is allowed.