COMMNR.,CENTRAL EXCISE & CUSTOMS, KERALA vs M/S. LARSEN & TOUBRO LTD.

The Supreme Court addressed the issue of whether service tax can be levied on indivisible works contracts prior to the enactment of the Finance Act, 2007. The Court reaffirmed the principle established in State of Madras v. Gannon Dunkerley & Co. (1959) that such contracts are composite and indivisible, thus not subject to service tax before the specified date. The Court held that the introduction of the Finance Act, 2007, clarified the taxability of these contracts, and prior to this, no service tax could be imposed on them.