AIR 2015 SUPREME COURT 3600 ::2015 AIR SCW 4869 ::2016 (1) SCC 170 ::(2015) 9 Scale 91 ::AIR 2015 SC (Civil) 2285 ::(2015) 4 KCCR 556 ::(2016) 157 AllIndCas 6 (SC)

Supreme Court Of India

Hon'ble Judge(s): A. K. Sikri, R. F. Nariman , JJ

(A) Finance Act (32 of 1994) , S.64, S.65— (prior to 2007 Amendment) - Service tax - Levy on works contracts - Would only be on service contracts simpliciter - Not on composite indivisible works contracts. Constitution of India , Art.366(29A)(b)— Unless the splitting of an indivisible works contract is done taking into account the eight heads of deduction, the charge to tax that would be made would otherwise contain, apart from other things, the entire cost of establishment, other expenses, and profit earned by the contractor and would transgress into forbidden territory namely into such portion of such cost, expenses and profit as would be attributable in the works contract to the transfer of property in goods in such contract. This being the case the service tax charging section itself must lay down with specificity that the levy of service tax can only be on works contracts, and the measure of tax can only be on that portion of works contracts which contain a service element which is to be derived from the gross amount charged for the works contract less the value of property in goods transferred in the execution of the works contract. This not having been done by the Finance Act, 1994, it is clear that any charge to tax under the five heads in S. 65(105) would only be of service contracts simpliciter and not composite indivisible works con....