2013 (11) TMI 917 - AT - Service Tax

Demand of service tax - Tax on Commissioning and Installation Service - laying of submarine pipelines, for the transport of petroleum crude oil from Bombay High and Bassein Filed Offshore sites - Held that - Activity covered under the tax net is only commissioning or installation of plant, machinery or equipment . This Tribunal in the case of Indian Hume Pipes Co. Ltd. 2008 (7) TMI 71 - CESTAT, CHENNAI held that pipes or pipeline does not come under the category of plant, machinery or equipment and therefore laying of pipeline does not come within the scope of Commissioning or Installation Service . In any case, laying of pipelines has been specifically covered under Commercial Construction Service which came into effect from 16/06/2005. During the impugned period, the activity of laying of pipeline was not covered under the Commissioning and Installation Service . Therefore, we do not find any infirmity in the Commissioner s order dropping the demand - Decided against Revenue.

Summary

Issues:
- Classification of services provided by the respondent for laying submarine pipelines.
- Whether laying of pipelines falls under 'Commissioning and Installation Service' or 'Commercial Construction Service'.
- Taxability of laying pipelines during the impugned period.

Analysis:
1. Classification of services provided: The respondent, a company involved in laying submarine pipelines under an agreement with another company, was under scrutiny for the classification of services provided. The department contended that the activities undertaken by the respondent fell under 'Commissioning and Installation Service' and issued a notice demanding service tax. However, the Commissioner ruled that laying pipelines, as part of turnkey projects, did not come under this category but might be classifiable under 'Commercial Construction Service' which was effective from a later date. The Commissioner concluded that during the relevant period, laying pipelines was not a taxable activity, hence dropping the demand.

2. Nature of the activity for taxability: The Revenue, dissatisfied with the Commissioner's decision, argued that the laying of pipelines should be considered under 'Commissioning and Installation of Plant, Machinery or Equipment' which became taxable from a specified date. The contention was that the respondent's services included a bundle of services, including commissioning and installation, making it taxable. However, the Tribunal analyzed the legal provisions and precedent set by the case of Indian Hume Pipes Co. Ltd. The Tribunal held that laying pipelines did not fall under 'plant, machinery, or equipment' and was specifically covered under 'Commercial Construction Service' introduced later. As a result, the Tribunal upheld the Commissioner's decision to drop the demand as the laying of pipelines was not taxable during the impugned period.

3. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the Commissioner's order and ruling in favor of the respondent. The judgment clarified that laying of pipelines did not fall under 'Commissioning and Installation Service' during the relevant period and was not subject to taxation. The respondent was deemed eligible for any relief as per the law. The decision was based on the interpretation of relevant legal provisions and established precedents, ensuring clarity on the taxability of the specific services provided by the respondent.