2017 (3) TMI 1661 - AT - Service Tax

Construction services - appellant was engaged in providing the pipelines for the Government of Rajasthan - Held that - the identical issue has come up before the Tribunal in the case of Lanco Infratech Ltd. Vs. CCE 2015 (5) TMI 37 - CESTAT BANGALORE (LB) , where it was observed that Construction of canals/pipelines/conduits to support irrigation, water supply or for sewerage disposal, when provided to Government/Government undertakings would be for non-commercial, non-industrial purposes, even when executed under turnkey/EPC contractual mode and would fall within the ambit of clause (b), Explanation (ii) of Section 65 (105)(zzzza); and would consequently not be exigible to service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Original dated 9.1.2014 regarding service tax on providing pipelines for the Government of Rajasthan.
- Interpretation of whether construction of pipelines for government purposes falls under service tax ambit.
- Application of Tribunal's decision in Lanco Infratech Ltd. case on non-commercial, non-industrial purposes.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI challenged the Order-in-Original dated 9.1.2014 concerning the imposition of service tax on providing pipelines for the Government of Rajasthan. During the period under consideration, the appellant was engaged in this activity, which the department brought under the service tax net. The appellant contended that the activity should not be subject to service tax. The Tribunal heard arguments from both sides, where the appellant was represented by Shri S. Jaikumar, and the respondent by Shri Sanjay Jain, DR.

The Tribunal referred to a previous case, Lanco Infratech Ltd. Vs. CCE, where it was established that construction of canals/pipelines/conduits for government purposes, even under turnkey/EPC contractual mode, would not be subject to service tax. This determination was based on the exclusion clause in the relevant section. Following the precedent set in the Lanco Infratech Ltd. case, the Tribunal found no justification to uphold the impugned order and consequently set it aside. As a result, the appeal filed by the appellant was allowed, providing relief in the matter of service tax on providing pipelines for government use. The decision was dictated and pronounced in open court by the Tribunal.