2018 (11) TMI 1083 - AT - Service Tax

Works contract service or not - construction of water treatment plant, sewage treatment plant constructed by the appellant - service, non-commercial in nature - Held that - The Tribunal in the case of Jyoti Buildtech (P) Ltd. 2017 (3) TMI 1100 - CESTAT ALLAHABAD , had occasion to analyze the demand of service tax on erection, commissioning and installation service on water treatment plant, sewage treatment plant etc. The Tribunal in the said decision followed the decision in the case of Lanco Infratech Ltd. 2015 (5) TMI 37 - CESTAT BANGALORE (LB) and held that such constructions are not subject to levy of service tax under works contract service - demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Determining whether the construction of water treatment plant and sewage treatment plant by the appellant is subject to levy of service tax under works contract service.

Analysis:
1. The appellants engaged in supply, erection, and commissioning of sewage treatment plant and water supply projects. The department alleged non-payment of service tax for these services from 1.4.2008, considering them as EPC projects. Show cause notices were issued for the period 1.4.2008 to 31.3.2009 and subsequently for 1.4.2009 to 31.3.2012. The original authority confirmed the demand, leading to these appeals.

2. The appellant argued that the services provided to Government/Municipal bodies were non-commercial and fell under the exclusion clause of works contract service. They referenced the decision in Lanco Infratech Ltd. and Indian Hume Pipes Ltd. to support their claim for exemption from service tax.

3. The department contended that the projects undertaken by the appellants, including construction of sewage treatment plant and water treatment plant, were taxable under works contract service. The AR supported the findings in the impugned order, emphasizing that turnkey projects like these were taxable services.

4. The main issue was whether the construction of water treatment plant and sewage treatment plant by the appellant was subject to service tax under works contract service. The appellant argued that the projects were non-commercial in nature, while the department maintained that they fell under taxable services due to being turnkey projects.

5. The Tribunal analyzed previous decisions, including Lanco Infratech Ltd. and Indian Hume Pipes Co. Ltd., which held that similar activities for Government bodies were non-commercial and exempt from service tax. The Tribunal also referred to the decision in Jyoti Buildtech (P) Ltd., where the demand for service tax on similar services was set aside.

6. Considering the settled precedents and interpretations, the Tribunal concluded that the demand for service tax could not be sustained and needed to be set aside. The refund claim filed by the appellant was allowed based on the decisions in Lanco Infratech and Indian Hume Pipes Co. Ltd.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal interpretations applied, and the final decision reached by the Tribunal based on established precedents and relevant legal principles.