‘Works Contract' Taxable Pre-2007: CESTAT 5 Member Bench

Key Takeaways

One of the most important judgments on 'works contract' taxability pre-2007 has been pronounced by a 5 Member Larger Bench of Delhi CESTAT on March 19, 2015. We bring you the key takeaways from the LB ruling:

• CESTAT Larger Bench rules on taxability of 'Works Contract' prior to June 2007 by 3:2 majority.
• Members (Technical) held that service elements in a composite contract could be subject to service tax prior to June 1, 2007 as well, if these are classifiable under "Commercial or Industrial Construction" (CICS), "Construction of Complex" (COCS) or "Erection Commissioning or Installation" (ECIS).
• On the other hand, CESTAT President and Judicial Member concluded that a composite contract cannot be vivisected pre- 2007 and 'works contract' would be taxable only under 'Works Contract Service' u/s 65(105)(of the Finance Act, 1994.