2017 (9) TMI 793 - AT - Service Tax

Installation, commissioning and erection service - management maintenance or repair service - the respondents were engaged by BSNL for the work of laying of optical fibre cables and outdoor upgradation work execution of repair and maintenance thereof - CBEC Circular dated 24th May, 2010 - Held that - I have gone through the observations made by the learned Commissioner (Appeals) who has relied on the CBEC Circular dated 24th May, 2010 to hold that the said services of laying of optical fibre cable is not to be taxed as per the said circular. The activity such as excavation of trenches, jointing splicing of OFC are the integral part of the services of laying of cable - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against dropping demand based on CBEC Circular No.123/5/2010-TRU - Taxability of laying of optical fibre cables under service tax provisions - Applicability of CBEC Circular - Imposition of penalty.

Analysis:
The judgment pertains to an appeal where the Revenue challenged an order dropping the demand against the respondent based on the CBEC Circular No.123/5/2010-TRU. The case involved the taxability of laying optical fibre cables under service tax provisions. The Adjudicating Authority had confirmed the demand against the respondent, categorizing the activities as installation, commissioning, and maintenance services. However, the learned Commissioner (Appeals) relied on the CBEC Circular to rule that the respondent was not liable to pay service tax. The Revenue appealed this decision.

Upon reviewing the grounds of appeal, it was noted that the respondent did not provide any reason why the circular was not applicable. The learned Commissioner (Appeals) examined the issue extensively and found that the laying of optical fibre cables by the respondent did not fall under taxable categories. The authority observed that the respondent's work was specialized, involving installation and commissioning of cables for BSNL. The Commissioner distinguished the work from the activities mentioned in the Board's circular, which clarified non-taxability for laying cables under or alongside roads.

Furthermore, the Commissioner referenced relevant case laws where the Tribunal had held that laying of cables for BSNL was not subject to service tax based on the Board's circular. The judgment highlighted specific cases like COMMISSIONER OF C. EX. AND S. TAX, BHOPAL VS. SANJEEV KUMAR JAIN and CHAITANYA ENTERPRISES VS. CCE, HYDERABAD, where the Tribunal favored the assessee based on the circular's interpretation. The Commissioner concluded that the respondent's activities were covered by the circular and set aside the original demand for service tax.

Considering the integral nature of activities like excavation of trenches and jointing of cables to laying optical fibre cables, the Commissioner upheld the decision that the services were not taxable under service tax provisions. Consequently, the imposition of penalty for non-payment of service tax was deemed unnecessary. The judgment dismissed the Revenue's appeal, affirming the decision based on the CBEC Circular's interpretation.

In summary, the judgment analyzed the applicability of the CBEC Circular in determining the taxability of laying optical fibre cables under service tax provisions. It extensively reviewed the activities undertaken by the respondent, referenced relevant case laws, and ultimately upheld the decision that the services provided were not subject to service tax, based on the interpretation of the circular.