<p>The Supreme Court on Tuesday declared that no service tax could be levied on composite work contracts which were executed before 2007.</p>.<p>A bench of Justices M R Shah and B V Nagarathna, in their unanimous but separate judgements, set aside judgements, given by high courts and tax tribunals across the country, contrary to the top court's findings.</p>.<p>The bench said that assesses are not liable to pay the service tax for the contracts performed prior to the introduction of the Finance Act, 2007.</p>.<p>A group of appeals raised the question whether service tax could be levied on composite works contracts prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to works contracts.</p>.<p>The Finance Act 2007 had imposed tax on work contracts by amending the 1994 law. A composite works contract is essentially a contract of service which also involves supply of goods in the execution of the contract.</p>.<p>The apex court had in 2016, in the case of Commissioner, Central Excise and Customs, Kerala Vs Larsen and Toubro, also held that no such tax could be levied, but the government had asked the apex court to have a re-look into the issue. The SC had then specifically overruled the judgment of the Delhi High Court in the case of G D Builders and held that the observations made by the HC was wholly inaccurate in its conclusion that the Finance Act, 1994 contained both the charge and machinery for levy and assessment of service tax on indivisible works contracts.</p>.<p>The latest decision came on appeals filed by Total Environment Building Systems and others against various HC and tribunal orders passed around 2008-2009.</p>.<p>In its judgement, the apex court said that “Assessment orders in originals levying the service tax on the respective assesses on the indivisible/composite works contracts for the period prior to pre-2007 are hereby quashed and set aside. Necessary consequences shall follow.”</p>.<p>In her separate judgment, Justice Nagarathna noted that the court does not agree with government's contention that even before the 2007 amendment there was provision of service tax on composite works contract.</p>
<p>The Supreme Court on Tuesday declared that no service tax could be levied on composite work contracts which were executed before 2007.</p>.<p>A bench of Justices M R Shah and B V Nagarathna, in their unanimous but separate judgements, set aside judgements, given by high courts and tax tribunals across the country, contrary to the top court's findings.</p>.<p>The bench said that assesses are not liable to pay the service tax for the contracts performed prior to the introduction of the Finance Act, 2007.</p>.<p>A group of appeals raised the question whether service tax could be levied on composite works contracts prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to works contracts.</p>.<p>The Finance Act 2007 had imposed tax on work contracts by amending the 1994 law. A composite works contract is essentially a contract of service which also involves supply of goods in the execution of the contract.</p>.<p>The apex court had in 2016, in the case of Commissioner, Central Excise and Customs, Kerala Vs Larsen and Toubro, also held that no such tax could be levied, but the government had asked the apex court to have a re-look into the issue. The SC had then specifically overruled the judgment of the Delhi High Court in the case of G D Builders and held that the observations made by the HC was wholly inaccurate in its conclusion that the Finance Act, 1994 contained both the charge and machinery for levy and assessment of service tax on indivisible works contracts.</p>.<p>The latest decision came on appeals filed by Total Environment Building Systems and others against various HC and tribunal orders passed around 2008-2009.</p>.<p>In its judgement, the apex court said that “Assessment orders in originals levying the service tax on the respective assesses on the indivisible/composite works contracts for the period prior to pre-2007 are hereby quashed and set aside. Necessary consequences shall follow.”</p>.<p>In her separate judgment, Justice Nagarathna noted that the court does not agree with government's contention that even before the 2007 amendment there was provision of service tax on composite works contract.</p>