Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | prior to introduction of Finance Act 1994) - Whether leviable on indivisible works contract 2007 - Held: A works contract is a separate species of contract distinct from contracts of services simpliciter and need to be taxed separately as such Service tax (as introduced by Finance Act |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Disposed Off |
Headnote | Service tax (as introduced by Finance Act, 1994) -Whether leviable on indivisible works contract, prior tointroduction of Finance Act, 2007 - Held: A works contract isa separate species of contract distinct from contracts ofservices simpliciter and need to be taxed separately as such- The service tax charging section itself must lay down withspecificity that the levy of service tax can only be on workscontract- 1994 Act lays down charge of tax only for the servicetax simpliciter- It does not lay down charge or machinery tolevy and assess service tax on indivisible composite workscontracts - Where there is no machinery for assessment,the law being vague, it would not be open to the assessingauthority to arbitrarily assess the subject to tax -Therefore,service tax could not have been levied on compositeindivisible works contract, prior to Finance Act, 2007 whichexpressly makes such works contracts liable to service tax -Finance Act, 1994 - s. 65 (105)(zzzza) [as inserted byFinance Act, 2007]- s. 67 [as amended by Finance Act 2006]- Service Tax (Determination of Value) Rules, 2006- r. 2A-Constitution of India, 1950- Schedule VII Lists I & II.Contract- Composite indivisible works contract enteredafter enactment of Finance Act, 1994 - Whether contrary topublic policy, being hit by s.23 of Contract Act and hit byMcdowellls case - Held: No, because the 1994 Act doesnot lay down charge or machinery to levy and assess service tax on indivisible composite works contracts -Also becausethere is no subterfuge in entering into composite workscontracts - Contract Act, 1872 - s. 23 - Finance Act, 1994.Constitution India, 1950-Art. 248; Schedule VII, List I and List II - Taxation powers of Centre and the States -Taxation powers of Centre and the States are mutuallyexclusive - The moment the levy contained in a taxing statutetransgresses into a prohibited exclusive field, it is liable tobe struck down - In composite indivisible works contracts, Parliament can only tax the service element and the Statescan only tax the transfer of property in goods element - Ifelement of transfer of property in goods remains, when aservice tax is levied, the said levy would be found to beconstitutionally infirm- Therefore, it is important to segregate the two elements completely |
Judge | Hon'ble Mr. Justice R.F. Nariman |
Neutral Citation | 2015 INSC 589 |
Petitioner | Commissioner, Central Excise & Customs, Kerala |
Respondent | M/s Larsen & Toubro Ltd. |
SCR | [2015] 8 S.C.R. 1046 |
Judgement Date | 2015-08-20 |
Case Number | 6770 |
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