2018 (11) TMI 1083 – CESTAT CHENNAI – TMI – Works contract service or not – construction of water treatment plant, sewage treatment plant constructed by the appellant – service, non-commercial in nature – Held that:- The Tribunal in the case of Jyoti Buildtech (P) Ltd. [2017 (3) TMI 1100 – CESTAT ALLAHABAD], had occasion to analyze the demand of service tax on erection, commissioning and installation service on water treatment plant, sewage treatment plant etc. The Tribunal in the said decision followed the decision in the case of Lanco Infratech Ltd. [2015 (5) TMI 37 – CESTAT BANGALORE (LB)] and held that such constructions are not subject to levy of service tax under works contract service – demand do not sustain – appeal allowed – decided in favor of appellant. – Appeal Nos. ST/410/2011 and ST/41631 to 41633/2014 – Final Order Nos. 42412-42415/2018 – Dated:- 14-9-2018 – Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri N. Viswanathan,
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94 which defines works contract service. It was also the view of the department that supply, erection and commissioning of sewage treatment plant cannot be construed as construction of pipeline which is exempted under sub-section (ii)(b) of the same section. Thus, show cause notice was issued for the period 1.4.2008 to 31.3.2009 proposing to demand the service tax along with interest and also for imposing penalties. Subsequently, show cause notices were issued for the very same dispute for the period 1.4.2009 to 31.3.2012. After due process of law, the original authority confirmed the demand along with interest and also imposed penalties. Hence these appeals. 2. On behalf of the appellant Shri N. Viswanathan assisted by Shri R. Ravikumar submitted that the said works of erection and commissioning of sewage treatment plant, water treatment plant would fall under works contract service with effect from 1.6.2007. However, such services are provided in respect of non-commercial activities
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d of ₹ 48,29,661/- and the Commissioner (Appeals) vide Order-in-Appeal No. 301/2016 dated 25.5.2016 has allowed the refund claim except for an amount of ₹ 7,89,267/-. In the said order, the Commissioner (Appeals) has followed the decision in the case of Lanco Infratech Ltd. as well as Indian Hume Pipes Ltd. reported in 2015 (140) STR 214. 2.1 He submitted that the services were rendered to Government / Municipal agencies and as such these were not used for commercial or industrial purposes. The department has taken the view that only in the case of laying of pipeline and conduit sub-clause (b) of said section would apply. He submitted that the work was awarded by EPC/turnkey projects which involves designing, execution and handing over and therefore cannot be said that such activities merely because they are in the nature of EPC projects would fallout of the exemption provided in clause (b) of works contract service. 2.2 He also relied upon the decision of the Tribunal in t
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nd therefore the demand raised is legal and proper. Further, the said projects were undertaken under turnkey projects and sub-clause (e) of the explanation clarifies that turnkey projects include engineering, procurement and construction or commissioning would be taxable service. 4. Heard both sides. 5. The main issue in the present appeals to be decided is whether the construction of water treatment plant, sewage treatment plant constructed by the appellant is subject to levy of service tax under works contract service. The appellants have argued that they would be exigible to service tax for the reason that the service of construction of water treatment plant and sewage treatment plant etc. were rendered to Government / Municipal bodies / Board and therefore are not of a commercial nature. It is the case of the department that since the projects were turnkey projects, it would fall under sub-clause (e) of the explanation to the definition of works contract service and that the said s
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05)(zzzza); (ii) construction of canals, pipelines or conduits for Government/Government undertakings for augmentation of irrigation, water supply or sewerage disposal would be for a non-commercial, non-industrial purpose or user and thus excluded in view of the exclusionary clause in clause (b) of WCS definition; and (iii) construction of canals, pipelines or conduits for transmission of water including by lift irrigation would be, when these works are conceived as integrated to a dam project, works contract in respect of a dam and thereby excluded from the purview of WCS. 5.1 Similarly, in Ramky Infrastructure Ltd., the Tribunal had held that such activities of construction of canals / pipelines or conduits undertaken for the Government / Government bodies would not attract levy of service tax being for non-commercial and non-industrial purpose. 5.2 The decision of the Larger Bench of Tribunal in Lanco Infratech Ltd. (supra) was approved by the jurisdictional High Court in the case o
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construction of water treatment plant and sewage treatment plant were set aside. The relevant portion reads as under:- 2. The brief facts as per the show cause notice dated 18-10-2012 for the period under dispute 2007-08 to 31st March, 2011, are that the appellant is registered under the provisions of service tax for construction and engineering service , erection, commissioning and installation services and works contract service . Pursuant to audit it appeared to Revenue that the appellants have not paid service tax on erection, commissioning and installation service being construction of sewage pumping station, water treatment plants, sewage treatment plant and sewage works. The SCN further observes that the appellant assessee had pleaded that the works of laying of pipelines for sewage etc. are not for commerce and trade and as such the same is exempted from service tax in terms of provisions of Explanation (ii)(b) of Section 65(105)(zzzza) of the Finance Act, 1994. The appellant c
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able to erection/Labour part. The balance is attributable to supply of items/materials. Thus, at best service tax is only leviable on this amount of ₹ 3,25,200/-. The learned counsel also states that it is admitted fact that all the transactions were found duly recorded by Revenue in the books of accounts maintained in the ordinary course of business. Further in view of the confusion prevailing regarding classification/exemption, and the issue being finally referred to and settled by the Larger Bench of this Tribunal, the issue is wholly interpretational and the extended period of limitation is not invocable. 4. The ld. AR for Revenue relies on the impugned order. 5. Having considered the rival contentions, we are satisfied that the issue now stands settled by the Larger Bench of this Tribunal in M/s. Lanco Infratech Ltd. (supra) and also confirmed by order of the Hon ble Madras High Court (supra) in Indian Hume Pipes Ltd. wherein it has been held that such works executed by the
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