2016 (9) TMI 987 - AT - Service Tax

Demand alongwith interest and penalty - Work Contract Service - work of clearing/ supplying laying and jointing the concrete pipes, construction of concrete cradle bedding for these pipes and other related works as a contractor for U.P. Jal Nigam - received payment for such work - Held that - we deem it fit and proper in the interest of justice and accordingly, set aside the impugned order and remand the matter back to the Ld. Commissioner/ adjudicating authority for a denovo decision on merits after hearing the appellant and considering the law laid down by the Larger Bench in Lanco Infratech Ltd. Vs. CC, CE & S.T. 2015 (5) TMI 37 - CESTAT BANGALORE (LB) during the pendency of this appeal and other rulings. - Appeal allowed by way of remand

Summary

Issues:
Classification and taxability of services provided by the appellant under the category of 'Work Contract Service' prior to exemption notification dated 17/03/2012.

Analysis:
The appellant, M/s Concrete Udyog Ltd, appealed against the Order-in-Original dated 29.03.2014, proposing recovery of service tax amounting to ?3,36,90,351/- along with interest and penalties under various sections of the Finance Act. The service provided by the appellant involved clearing, supplying, laying, and jointing concrete pipes, among other related works for U.P. Jal Nigam. The Revenue contended that prior to the exemption notification, the appellant was liable to pay service tax under the category of 'Work Contract Service.' The appellant challenged the order on the grounds that the adjudicating authority exceeded the scope of the show cause notice and that they were not liable to pay service tax under Works Contract Service.

The Ld. Counsel for the Appellant referred to a larger Bench decision in the case of M/s Lanco Infratech Ltd. Vs. CC, CE & S.T., which addressed issues related to the classification and taxability of services provided to the Government or Government undertakings. The issues before the larger Bench included whether certain activities should be classified under ECIS or CICS, the tax liability for construction projects for Government undertakings, and the applicability of service tax on turnkey projects. The Ld. Counsel argued that the work executed by the appellant falls under the issues identified by the larger Bench.

The Larger Bench held that construction of pipelines/conduits for Government/Government undertakings for water supply or sewerage disposal purposes, prior to 01.06.2007, falls under CICS and is excluded from the definition of WCS. The construction of pipelines or conduits primarily for commerce or industry is considered within the definition of WCS. The Ld. Counsel urged that based on this interpretation, the appellant's activity of construction of pipelines for U.P. Jal Nigam is not a taxable activity. The Ld. Counsel requested a remand of the matter to the Ld. Commissioner for a fresh decision considering the findings of the Larger Bench.

The Ld. A.R. for Revenue supported the impugned order but acknowledged that the Ld. Commissioner did not have the benefit of the Larger Bench's order. The Tribunal, after considering the arguments, set aside the impugned order and remanded the matter back to the Ld. Commissioner for a fresh decision on merits, taking into account the law laid down by the Larger Bench and other relevant rulings. The appeal was allowed by way of remand, and the stay petition was disposed of.