2020 (4) TMI 202 - AT - Service Tax

Non-payment of service tax - Erection, Commissioning Installation services - appellant is undertaking contracts for M/s BSNL for laying and jointing of optical fibre cables - demand of tax, interest, penalties as well as late fees - CBEC vide circular No. 123/5/2010-TRU, dated 24.05.2010 - HELD THAT - Revenue wants to charge service tax upon the appellant on the activity of laying of optical fibre cables. The laying of cables along side roads has been categorically held to be not taxable by the CBEC in their circular dated 24.05.2010 - The only argument against the applicability of this circular to this case is that it should not apply to fibre optical cables because it dealt with only electrical cables. This issue has been examined at length by the Hon ble Tribunal, Mumbai in the case of COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS H.M. SATYANARAYAN ENGINEERS CONTRACTORS 2018 (8) TMI 736 - CESTAT MUMBAI and it has been held that there is no difference between the activity of laying an electrical cable and the activity of laying an optical fibre cable and the Board circular applies in both the cases and no service tax can be charged on this activity. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax for laying and jointing optical fibre cables.
2. Applicability of CBEC circular on laying of cables under or alongside roads to optical fibre cables.
3. Interpretation of the activity of laying optical fibre cables in relation to service tax liability.

Analysis:
Issue 1: The appellant, engaged in laying optical fibre cables for a telecom company, was issued a show cause notice for non-payment of service tax. The Commissioner confirmed the demands, including interest and penalties. The appellant contested that the laying of cables did not fall under the category of "Erection, Commissioning and Installation Service."

Issue 2: The appellant argued that a CBEC circular clarified that laying cables under or alongside roads is not a taxable service. The Department contended that the circular applied to electrical cables, not optical fibre cables. The appellant cited precedents where it was held that laying optical fibre cables is akin to laying electrical cables, and thus, not taxable.

Issue 3: The Tribunal examined the arguments and records. It noted that the CBEC circular's applicability to optical fibre cables was challenged. Relying on precedents, the Tribunal held that there is no distinction between laying electrical and optical fibre cables. It concluded that no service tax could be charged on the activity of laying optical fibre cables, following the precedent set by the Tribunal in a similar case. The impugned order was set aside, and the appeal was allowed.

This judgment clarifies the tax liability concerning laying optical fibre cables, emphasizing the uniform treatment of laying different types of cables under the service tax provisions.