2024 (4) TMI 1126 - AT - Service Tax

Classification of services - Erection, Commissioning or Installation Service or not - services of laying of optic fibre cables provided to M/s.BSNL - suppression of facts or not - Extended period of Limitation - HELD THAT - The department has issued clarification on disputes by Board s Circular No.123/5/2010 that have arisen with regard to works related to cables. In the table given, in para-3 at Sl.No.3, it is mentioned that the laying of electric cables is exempt from levy of service tax. Sl.No.2 states that laying of cables under or alongside roads is exempted from levy of service tax. Sl.No.2 is not qualified with the word electric cable . The word cable is used in general sense and will apply to telecommunications cables also. It is opined that the clarification issued by the Board would apply and that the said activity is exempted from levy of service tax. The department themselves had a contrary view holding that the activity is not subject to levy of service tax. Further, the Tribunal in the case of CCE, LUCKNOW VERSUS M/S RAJ ELECTRIC WORKS 2017 (9) TMI 793 - CESTAT ALLAHABAD had held that the activity of laying of opting fibre cables for M/s.BSNL is not subject to levy of service tax. The Tribunal in the said case had followed the Board s circular and also other decisions which have categorically held that the activity is not subject to levy of service tax. The demand of service tax cannot sustain and requires to be set aside. The issue on merits is answered in favour of the appellant. Time Limitation - suppression of facts or not - HELD THAT - There is no suppression of facts brought out by the Department. The appellant has accounted the entire consideration received by them in their books. The demand has been raised on the figures obtained from the records maintained by the appellant. Further the issue is interpretational in nature. In such circumstances, the demand raised invoking the extended period also cannot sustain. The show cause notice is time-barred. The appellant succeeds on limitation also. The impugned order is set aside. The appeal is allowed.

Summary

Issues Involved:
1. Liability to discharge service tax for the activity of laying optic fibre cables.
2. Applicability of Board's Circular No.123/5/2010-TRU dated 24.05.2010.
3. Invocation of the extended period for demand alleging suppression of facts.

Summary:

1. Liability to discharge service tax for the activity of laying optic fibre cables:
The appellant provided services relating to cable laying for M/s.BSNL during 2008-09 to 2009-10. The department viewed that this activity falls under 'Erection, Commissioning or Installation Service' as defined u/s 65(39a) of the Finance Act, 1994, and issued a show cause notice demanding service tax along with interest and penalties. The original authority confirmed the demand, and the Commissioner (Appeals) upheld the same. The Tribunal considered whether the appellant is liable to discharge service tax for the activity of laying optic fibre cables.

2. Applicability of Board's Circular No.123/5/2010-TRU dated 24.05.2010:
The appellant argued that the activity of laying cables is exempted from service tax based on Circular No.123/5/2010-TRU. The Circular clarifies that laying of cables under or alongside roads is not taxable u/s 65 of the Finance Act, 1994. The Tribunal noted that the Circular does not specify 'electric cables' and uses the term 'cable' in a general sense, which includes telecommunication cables. The Tribunal concluded that the clarification in the Circular applies, and the activity is exempt from service tax.

3. Invocation of the extended period for demand alleging suppression of facts:
The appellant contended that the demand raised by invoking the extended period is not sustainable as there was no suppression of facts. The figures for quantifying the demand were taken from the appellant's records. The Tribunal observed that the department had a contrary view in different cases, making the issue interpretational in nature. The Tribunal referred to the case of CCE, Cus. & ST Guntur Vs Indian Oil Corporation Ltd., which supports the argument that extended period cannot be invoked for interpretational issues. The Tribunal held that the show cause notice is time-barred, and the appellant succeeds on the ground of limitation.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any. The demand of service tax was found unsustainable on merits, and the show cause notice was deemed time-barred due to the interpretational nature of the issue and lack of suppression of facts by the appellant.