2012 (11) TMI 328 - AT - Service Tax

Waiver of pre-deposit of duty - Commercial or Industrial activity - Held that laying of pipeline is an infrastructure facility and a civic amenity the state provides in public interest and not an activity of commerce or industry - No liability to pay tax arises - pre-deposit of entire amount of service tax, interest and penalty waived - in favour of appellant.

Summary

Issues:
- Liability of service tax on laying long distance water pipeline in the State of Gujarat under the category of "Commercial or Industrial Construction Services".

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai dealt with the issue of whether the activity of laying long distance water pipeline in the State of Gujarat falls under the category of "Commercial or Industrial Construction Services" for the purpose of service tax liability. The applicants argued that their activity of laying water pipeline should not be subject to service tax as it is an infrastructure facility and a civic amenity provided in public interest, rather than a commercial or industrial activity. They relied on a previous decision by the Tribunal in the case of B.P. Sangle & Construction (P.) Ltd. v. CCE, Mumbai, where it was held that laying long distance water pipeline may not be considered as a commercial or industrial activity. The Tribunal considered this argument and found that the applicants had a strong case for waiver of pre-deposit. Consequently, the Tribunal waived the requirement of pre-deposit of the entire amount of service tax, interest, and penalty, and stayed the recovery during the pendency of the appeal. This decision was based on the precedent set by the Tribunal in similar cases, indicating a favorable approach towards the applicants' argument regarding the nature of their activity and its liability for service tax.