2022 (3) TMI 453 - HC - Service Tax

Commercial or Industrial Constructions Services - Lying of electrical cables under or alongside road/railway track - validity of proceedings on the basis of CBEC Circular No. 123/5/2010-TRU dated 24.05.2010 - Service Tax in relation to the same but never deposited the Service Tax so collected to the Government Ex-chequer - Hon'ble CESTAT, Allahabad was justified in not appreciating that apart from lying of cables, the assessee was involved in other host of various activities of non exempted category or not - HELD THAT - Undisputedly, the show cause notice was issued seeking to confirm the demand of service tax on the assessee for the work of laying cables alongside roads and railway tracks. The show cause notice does not appear to confirm or enforce any service tax liability on any other activity or on any other ground. With respect to activity conducted by the assessee, CBEC circular referred to and relied upon by the Tribunal is specific. By virtue of Clause 2 and 8 of the paragraph 3 of the said circular, the activity of laying cables under or alongside roads and alongside railway tracks was clearly opined to be not taxable under the Finance Act, 1994. That view had been formed by the highest administrative authority under the Finance Act, 1994, namely - Central Board of Indirect Taxes and Customs. The Tribunal has not erred in applying that Circular and deleting the proposed demand of service tax liability. As to the other issues sought be raised by learned counsel for the revenue pertaining to other activities that the assessee may have performed and the amount that may have been realized by the assessee against the proposed service tax liability but not deposited, are not issues as may give rise to a substantial question of law in the present appeal - the show cause notice that formed the basis of the adjudication order did not propose to create any demand of service tax. The fact that the adjudication order may have considered those issues outside the scope of the show cause notice would be of no benefit to the revenue in light of what was urged before the Tribunal - petition dismissed.

Summary

Issues:
Appeal under Section 35-G of Central Excise Act, 1944 against a tribunal's order. Questions of law on the applicability of CBEC Circular No. 123/5/2010-TRU, service tax liability for laying cables, and non-exempted activities by the assessee.

Analysis:

1. Appeal under Section 35-G:
The appeal was filed by the revenue challenging the Final Order passed by the Customs Excise and Service Tax Appellant Tribunal. The main contention raised was regarding the applicability of CBEC Circular No. 123/5/2010-TRU dated 24.05.2010 to the case at hand.

2. Applicability of CBEC Circular:
The Tribunal based its decision on the specific activity of laying cables under or alongside roads and railway tracks, as per the CBEC Circular. The Circular clearly stated that such activities were not taxable under the Finance Act, 1994. The Tribunal's reliance on this Circular was deemed appropriate as it was issued by the highest administrative authority under the Finance Act.

3. Service Tax Liability for Laying Cables:
The show cause notice issued to the assessee focused solely on confirming the demand of service tax for laying cables alongside roads and railway tracks. There was no mention of any other service tax liability for different activities. Therefore, the Tribunal's decision to drop the proceedings based on this specific issue was upheld.

4. Non-Exempted Activities by the Assessee:
The revenue raised concerns about other activities performed by the assessee and the alleged non-deposit of service tax collected for those activities. However, since these issues were not part of the show cause notice and did not give rise to substantial questions of law in the appeal, they were not considered relevant by the Court.

5. Dismissal of the Appeal:
Ultimately, the Court found that the grounds raised by the revenue outside the scope of the show cause notice did not hold merit in the appeal. The appeal was dismissed as it lacked substantial legal questions and failed to establish any service tax liability beyond the specific issue of laying cables under or alongside roads and railway tracks.

In conclusion, the judgment upheld the Tribunal's decision based on the applicability of the CBEC Circular and dismissed the appeal due to the lack of substantial legal questions raised by the revenue beyond the specific issue of service tax liability for laying cables.