2022 (12) TMI 657 - AT - Service Tax

Extended period of limitation - commercial or industrial construction service CICS - construction of STP, ETP and sewage systems (a) Whether onshore oil fields of ONGC Ahmedabad of the appellant, which have been registered under the Mines Act, 1952, wherein only extraction of crude oil is done, qualify as a factory in terms of section 2(e) of the Central Excise Act, 1944? And thus, activity of construction of Effluent Treatment Plants ( ETPs ) by appellant in such fields not eligible for exemption under Sl. 13(d) of the Notification No. 25/2012-ST dated 20.06.2012? (b) Whether extraction of crude oil amounts to manufacturing? HELD THAT - This issue has already been decided by the Tribunal in the aforesaid decision rendered in UEM India Limited 2021 (8) TMI 801 - CESTAT NEW DELHI . Thus, for all the reasons stated in the aforesaid order of the Tribunal, it would not be possible to sustain the order. Decided in favor of assessee.

Summary

Issues:
1. Whether the construction activities undertaken by the appellant qualify as taxable services under 'commercial or industrial construction service'?
2. Whether the demand of service tax for services rendered to specific entities is valid under the Notification dated 20.06.2012?
3. Whether the onshore oil fields of ONGC qualify as a factory for the purpose of exemption under Notification No. 25/2012-ST dated 20.06.2012?
4. Whether the extraction of crude oil amounts to manufacturing?

Analysis:

Issue 1: The appellant was engaged in construction activities related to Sewage Treatment Plant (STP), Effluent Treatment Plant (ETP), and sewage pipelines. The demand of service tax was made on the basis that the construction activities qualified as taxable services under 'commercial or industrial construction service.' The Adjudicating Authority confirmed the demands, which led to the appeal.

Issue 2: A show cause notice was issued proposing a demand of service tax for services rendered to Government bodies and other entities. The appellant contested the demand, claiming exemption under a Notification dated 20.06.2012. The Commissioner dropped the demand for services provided to Governmental authorities but confirmed demands for specific entities, denying the benefit claimed under the said Notification.

Issue 3: The Tribunal, in a previous decision, held that the oil fields of ONGC where only extraction of crude oil takes place do not qualify as a factory. Therefore, the construction of ETPs in such fields by the appellant is eligible for exemption under Serial No. 13(d) of the Notification dated 20.06.2012. This decision was accepted by the Department without filing an appeal.

Issue 4: The Tribunal had already decided that the extraction of crude oil does not amount to manufacturing. Consequently, the order passed by the Commissioner confirming the demand of service tax cannot be sustained. Therefore, the order was set aside, and the appeal was allowed.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the Commissioner's order confirming the demand of service tax. The judgment highlighted the eligibility of the construction activities for exemption under the Notification dated 20.06.2012 and clarified the interpretation of terms such as 'factory' and 'manufacturing' in the context of the case.