M/S. TOTAL ENVIRONMENT BUILDING SYSTEMS PVT LTD. vs. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES

C.A. No.-008673-008684 - 2013Supreme Court2022 INSC 78002 August 2022Bench: HON'BLE MR. JUSTICE M.R. SHAH HON'BLE MRS. JUSTICE B.V. NAGARATHNAAuthor: HON'BLE MR. JUSTICE M.R. SHAH70 pages
For Petitioner: PRAVEEN KUMAR
AI SummaryPartly Allowed

What were the facts?

This judgment consolidates multiple appeals concerning the levy of service tax on composite works contracts prior to the introduction of Section 65(105)(zzzza) by the Finance Act, 2007. The appeals arise from various High Court judgments and CESTAT orders. Appellants include M/s. Total Environment Building Systems Pvt. Ltd., YFC Projects Pvt. Ltd., M/s. G.D. Builders, M/s. National Building Construction Corporation Ltd. (NBCC), M/s. Unitech Ltd., and M/s. Larsen and Toubro Ltd. The Revenue, represented by the Deputy Commissioner of Commercial Taxes and Union of India, is the respondent in most cases. The core dispute revolves around whether service tax was leviable on such contracts before the specific amendment in 2007.

What did the Supreme Court hold?

The Supreme Court held that service tax was not leviable on composite works contracts prior to the introduction of Section 65(105)(zzzza) by the Finance Act, 2007. The Court affirmed its earlier decision in Commissioner, Central Excise and Customs, Kerala Vs. Larsen and Toubro Limited (2016) 1 SCC 170, stating that the Finance Act, 1994, prior to the 2007 amendment, did not contain the necessary charge or machinery for levying service tax on indivisible works contracts. The amendment by the Finance Act, 2007, was not clarificatory but introduced the levy for the service component of such contracts. The Court found the Revenue's contention for re-consideration of the Larsen and Toubro judgment to be incorrect. Consequently, the appeals filed by the assessees were allowed, except for Civil Appeal No. 6792 of 2010, which was dismissed. The reasoning is that the levy was introduced only from June 1, 2007, and prior to that, there was no specific taxable service defined as 'works contract' under the Act.

What were the issues?

1. Whether service tax could be levied on composite works contracts prior to the introduction of Section 65(105)(zzzza) by the Finance Act, 2007, which amended the Finance Act, 1994? (Question of law) Assessee's Contentions: - The assessee relies on the Supreme Court's decision in Commissioner, Central Excise and Customs, Kerala Vs. Larsen and Toubro Limited (2016) 1 SCC 170, which held that service tax was not leviable on indivisible works contracts prior to the Finance Act, 2007. - They argue that the amendment by the Finance Act, 2007, was not clarificatory but introduced a new charge for the service element of works contracts. - They also refer to Commissioner of Service Tax and Others vs. Bhayana Builders Private Limited and Others (2018) 3 SCC 782, supporting the view that no exemption arises if there was no levy in the first place. Revenue's Contentions: - The Revenue, through Ms. Madhavi Divan, ASG, does not dispute that the issue is covered by the Larsen and Toubro Limited (supra) decision. - However, the Revenue prays for a re-consideration of the decision in Larsen and Toubro Limited (supra). - The Revenue contends that service tax was leviable on works contracts even prior to the 2007 amendment.

Which sections of the Income-tax Act were involved?

Section 65

AI-generated summary — verify with the full judgment below

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURI ICTION CIVIL APPEAL NOS. 8673-8684 OF 2013 M/s. Total Environment Building Systems Pvt. Ltd. …Appellant(s) Versus The Deputy Commissioner of Commercial Taxes & Ors.

…Respondent(s) WITH CIVIL APPEAL NO. 6525 OF 2014 YFC Projects Pvt. Ltd. …Appellant(s) Versus Union of India

…Respondent(s) WITH CIVIL APPEAL NO. 6523 OF 2014 M/s. G.D. Builders …Appellant(s) Versus Union of India & Anr.

…Respondent(s) WITH 1 CIVIL APPEAL NO. 6526 OF 2014 M/s. National Building Construction Corporation Ltd. (NBCC) …Appellant(s) Versus Union of India & Anr.

…Respondent(s) WITH CIVIL APPEAL NO. 2666 OF 2022 (arising out of SLP (C) No. 36206 of 2014) M/s. Unitech Ltd. …Appellant(s) Versus Union of India & Ors.

…Respondent(s) WITH CIVIL APPEAL NOS. 4547-4548 OF 2014 M/s. National Building Construction Corporation Ltd. (NBCC) …Appellant(s) Versus Union of India & Ors.

…Respondent(s) WITH 2

CIVIL APPEAL NO. 2667 OF 2022 (arising out of SLP (C) No. 21828 of 2015) M/s. Larsen

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