2011 (10) TMI 317 - AT - Service Tax

Whether Laying of optical fibers can be covered under Erection, Commissioning and Installation services - Appellant also contended that prior to 16.6.2005, they were not liable to pay service tax at all. From February, 2005 they had paid service tax. Held That - laying the cables under or alongside the road is not taxable service. As far as the issue of liability is concerned matter remanded back the requirement of pre-deposit of amounts demanded and penalties imposed, is waived .

Summary

Issues: Service tax liability on laying optical fibers under erection, commissioning, and installation services; Consideration of Board circular post personal hearing; Remand for fresh adjudication.

Analysis:

The judgment involves the issue of service tax liability on the laying of optical fibers by the appellant under the category of erection, commissioning, and installation services, brought into the service tax net from July 1, 2003. The appellant was demanded Rs. 1,81,060 as service tax, along with interest and penalties under various sections of the Finance Act, 1994. The appellant contended that they were not liable to pay service tax before a certain date and referred to a circular issued by the Board, which clarified that laying cables under or alongside the road is not a taxable service under the mentioned category. The circular was not available at the time of the personal hearing, and the original adjudication order did not consider it. The Commissioner (Appeals) dismissed the submission related to the circular, stating it was not the crux of the issue. The judgment emphasized that the liability before a specific date was contested, and the circular should have been considered as it related to the taxability of the service provided by the appellant.

Furthermore, the judgment highlighted the importance of considering the Board circular, issued subsequent to the personal hearing, regarding the taxability of the service rendered by the appellant. The judgment concluded that if the service tax is not liable to be paid, the imposition of penalties and interest does not arise. Therefore, the matter was remanded to the original adjudicating authority for fresh adjudication. The requirement of pre-deposit of demanded amounts and penalties was waived, with all issues kept open for reconsideration. The original adjudicating authority was directed to thoroughly analyze the applicability of the Board circular to the activities undertaken by the appellant to determine the taxability of the service provided before proceeding further.

Lastly, a doubt arose during the hearing regarding whether the issue could be considered by a single Member or not. Both parties agreed that the issue pertained to the taxability of the service, not classification, and thus could be decided by a single Member. Despite the completion of dictation, the judgment was passed to remand the matter for further adjudication, considering the nature of the service provided by the appellant and the applicability of the Board circular in detail.