#Composite Contract

CESTAT Hyderabad rules that service tax paid on leadership fees in consortium turnkey projects qualifies for CENVAT credit, provided the services are not exclusively linked to exempt manufacturing activities and tax was properly discharged under reverse charge. This clarifies the eligibility of indirect service costs in complex infrastructure contracts, impacting consortium-based EPC players nationwide.

CESTAT Hyderabad ruled that composite works contracts cannot be taxed under 'Construction of Complex Service' and barred demands where show cause notices were repeatedly issued, citing the precedent in L&T Ltd. v. CST. The decision reinforces that pre-2007 contracts lacking a specific taxable category cannot be retrospectively taxed, offering relief to developers engaged in integrated township projects.

CESTAT Hyderabad clarifies that RailTel's Optical Fibre Cable (OFC) laying project under a composite contract with Indian Railways qualifies as a Works Contract Service, exempt from service tax. The ruling rejects the department's classification as Business Support Service, saving RailTel ₹1.6 crore in tax demands and setting a precedent for infrastructure projects with similar contractual structures.

Madras High Court holds that Arbitral Tribunals under MSMED Act lack jurisdiction over composite works contracts involving erection and commissioning, setting aside award.