2011 (10) TMI 103 - AT - Service Tax

Abatement in terms of notification No. 1/2006 - construction of boundary wall as also for laying down hume pipes - paying Service Tax on the construction of boundary wall - the issue stands discussed by the lower authorities from the different angle and on wrong appreciation of facts. Inasmuch as learned advocate agrees with the learned SDR that no service tax was paid by them on said activity of laying down of pipe lines and as such, question of rebate on such activity does not arise. - Decided that set aside the impugned order and remand the matter to the original adjudicating authority - appellants are at liberty to produce evidence before the original adjudicating authority to substantiate their above plea - Decided in the favour of appellants

Summary

Issues:
1. Service Tax liability on the activity of laying down hume pipes.
2. Applicability of abatement notification.
3. Need for remand to original adjudicating authority for further examination.

Analysis:
1. The appellants had a contract with a company for construction work, including laying down hume pipes. While they paid Service Tax on the construction work, no tax was paid on the activity of laying down pipes. The appellants argued that as the pipe-laying was not a commercial activity of the company but a social development activity, no Service Tax liability should arise. They relied on a Tribunal decision to support their claim.

2. The lower authorities incorrectly focused on the abatement notification issue rather than the core question of Service Tax liability for the pipe-laying activity. The adjudicating authority wrongly assumed that Service Tax had been paid on a portion of the contract value, when in reality, no tax had been paid for laying the pipes. The Revenue department acknowledged this error and agreed that no tax had been paid on the pipe-laying activity, suggesting a remand to the original authority for a proper examination of the facts.

3. The Tribunal concurred with the Revenue's stance and set aside the previous order, remanding the matter for a fresh examination by the original adjudicating authority. The appellants were given the opportunity to present evidence supporting their argument that the pipe-laying was a non-commercial, social activity. The stay petition and appeal were disposed of accordingly, emphasizing the need for a thorough review based on the correct legal perspective.

This judgment highlights the importance of accurately assessing Service Tax liability based on the nature of the activity performed, distinguishing between commercial and non-commercial endeavors to determine tax obligations effectively.