2015 (6) TMI 229 - AT - Service Tax

Waiver of pre deposit - Works Contract Service - Held that - Services provided to various customers which are in the nature of laying of pipelines for water supply may not be leviable to service tax under works contract service in view of the fact that in this case, water supply was made by the Government or Municipality to the citizens and therefore, it cannot be said on prima facie basis that works contract was in relation to commercial or industrial purpose. Therefore, substantial portion of demand gets excluded for the purpose of requirement of pre-deposit. It is also seen that another demand of more than 52 lakhs is for laying of pipelines and construction of the same for SEZ and prima facie , the appellant has made out a case. - Stay granted.

Summary

Issues:
Service tax demand for the period 1.10.2010 to 30.09.2011 under Works Contract Service and Management, Maintenance or Repair Service, interest, and penalties confirmed against the appellants.

Analysis:
The Appellate Tribunal considered the nature of services provided by the appellant, which involved laying pipelines for water supply. It was observed that services related to laying pipelines for water supply made by the Government or Municipality to citizens may not be leviable to service tax under Works Contract Service if not in relation to commercial or industrial purposes. Consequently, a substantial portion of the demand was excluded for the purpose of the requirement of pre-deposit. Another demand for laying pipelines and construction for SEZ was also considered, and the appellant was found to have made out a prima facie case in this regard.

One specific activity undertaken by the appellant was the laying of pipelines for water distribution for a client, where various water supply facilities were provided for an Industrial Growth Centre to be developed by them for the Andhra Pradesh Government. The work included construction of pumping of main valve, laying jointing, testing of pipelines, construction of control room, sump, pump house, among others. The Tribunal opined that laying pipelines for water supply to an Industrial Growth Centre cannot be considered a service not primarily related to commerce or industry. Therefore, in this specific case, the appellant was directed to deposit a specific amount within a stipulated time frame, with the requirement of pre-deposit of balance dues being waived subject to compliance, and a stay against recovery being granted during the pendency of the appeal.

In conclusion, the judgment analyzed the service tax demand under Works Contract Service and Management, Maintenance or Repair Service for a specific period, considering the nature of services provided by the appellant in relation to laying pipelines for water supply. The Tribunal differentiated between services provided for commercial or industrial purposes and those related to public utility like water supply by the Government or Municipality. Specific amounts were directed to be deposited by the appellant based on the Tribunal's assessment of prima facie cases made out by the appellant in different scenarios, with considerations for waiver of pre-deposit and stay against recovery during the appeal process.