2016 (12) TMI 665 - AT - Service Tax

Levy of tax - setting up of water supply / drainage infrastructure involving laying of underground pipelines and other works - bona fide belief that these works are not meant for commerce but are meant for the purposes of general public utility - Held that - Following the judgment laid in Lanco Infra Tech Ltd., 2015 (5) TMI 37 - CESTAT BANGALORE (LB) case, this Bench has, on identical issue, remanded the matter to adjudicating authority. Therefore, in the light of the decision laid in Lanco Infra Tech Ltd., we remand this matter to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Service tax liability on activities related to setting up water supply/drainage infrastructure for public utility.
2. Imposition of penalty and interest by the adjudicating authority.
3. Applicability of Tribunal's decision in the case of Lanco Infra Tech Ltd. to the present case.

Analysis:
1. The Appellate Tribunal CESTAT Hyderabad dealt with a case where the Appellant provided taxable services for setting up water supply/drainage infrastructure to public entities. The Appellant argued that they believed these activities were not for commerce but for public utility, hence no service tax was paid. The Tribunal noted the submission and the termination of contracts by one of the entities, leading to no service tax payment. However, a show cause notice was issued demanding a substantial service tax amount along with interest and penalties. The adjudicating authority confirmed the demand and penalties, prompting the Appellant to appeal.

2. During the hearing, the Appellant's counsel referred to a decision by the Tribunal's Larger Bench in the case of Lanco Infra Tech Ltd., indicating that the issue in dispute was addressed in that judgment. Following the principles laid down in the Lanco Infra Tech Ltd. case and a subsequent decision in a similar matter involving M/s Ayyappa Infra Projects Pvt Ltd., the Tribunal decided to remand the present matter back to the adjudicating authority. The Tribunal set aside the impugned order, allowing the appeal by way of remand, in line with the decisions in the referenced cases.

3. The Tribunal's decision in this case highlights the importance of legal precedents and the application of established principles to similar cases. By remanding the matter based on previous judgments, the Tribunal ensures consistency and adherence to legal interpretations in matters of service tax liability and penalties. The reference to specific cases and the reliance on Tribunal decisions demonstrate the significance of legal precedents in resolving disputes and ensuring fair treatment in tax matters.