2024 (6) TMI 1332 - AT - Service Tax

Levy of service tax - Erection, Commissioning and Installation Service - providing services of laying of pipelines for water supply and drainage to Surat Municipal Corporation and others - HELD THAT - he matter is no longer res-integra as it has already been decide in the case of SHREE HINDUSTAN FABRICATORS VERSUS C.C.E. S.T. -SURAT-I 2020 (2) TMI 110 - CESTAT AHMEDABAD that 'the activities under taken by the appellant cannot be classified under ECIS.' Since the present appeals appears to be part of the investigation which have been carried out against M/s. Shree Hindustan Fabricators and the present appellants are only the sub-contractor of the main contractor M/s. Shree Hindustan Fabricators and were engaged in providing service of laying pipelines for water supply and drainage to the Surat Municipal Corporation - Since the demand of service tax has been made in these appeals under service tax category of Erection, Commissioning and Installation Service however, in the similar matter of M/s. Shree Hindustan Fabricators, this Tribunal has held that the correct classification of such services should be under Commercial and Industrial Construction service as per Section 65 (25b) of the Finance Act, 1994. The impugned orders-in-appeal are without any merit - appeal allowed.

Summary

Issues Involved:
- Classification of services under Erection, Commissioning, and Installation Service
- Applicability of service tax on laying of pipelines for water supply and drainage
- Correct classification of services under Commercial and Industrial Construction Service
- Role of sub-contractors in service tax liability
- Interpretation of legal precedents and tribunal decisions

Analysis:

1. Classification of services under Erection, Commissioning, and Installation Service:
The case involved multiple appeals arising from common investigations initiated by the Central Excise Intelligence department regarding the provision of services for laying pipelines for water supply and drainage. The investigation revealed that the appellants provided services to the main contractor, M/s. Shree Hindustan Fabricators. Show cause notices were issued alleging non-payment of service tax under the category of Erection, Commissioning, and Installation Service. The Commissioner (Appeals) confirmed the notices, leading the appellants to appeal the decision.

2. Applicability of service tax on laying of pipelines:
The appellants argued that their activities did not fall under the category of Erection, Commissioning, and Installation Service as claimed by the department. They relied on legal precedents and tribunal decisions to support their position. Notably, they highlighted the decision in the case of M/s. Shree Hindustan Fabricators, where the Tribunal classified similar services under Commercial and Industrial Construction Service rather than ECIS. The Tribunal agreed with this argument, emphasizing that the activities related to laying pipelines for public infrastructure projects did not align with ECIS classification.

3. Correct classification of services under Commercial and Industrial Construction Service:
The Tribunal's analysis focused on the interpretation of the relevant legal provisions and precedents. They cited the decision in the case of Indian Hume Pipe Co. Ltd., where the Tribunal differentiated between erection, commissioning, and installation activities. The Tribunal concluded that the services provided by the appellants were more aptly classified under Commercial and Industrial Construction Service based on the nature of the projects and the public interest involved.

4. Role of sub-contractors in service tax liability:
The department argued that the appellants acted as sub-contractors and not as main contractors, attempting to shift the tax liability based on this distinction. However, the Tribunal dismissed this argument, emphasizing that the demand was solely raised under ECIS, and based on legal findings, no such demand could be sustained against the appellants.

5. Interpretation of legal precedents and tribunal decisions:
The Tribunal extensively analyzed legal precedents, including decisions of Larger Bench and High Courts, to support their conclusion. They highlighted the importance of consistent classification based on the nature of services provided, especially in public interest projects. By aligning their decision with established legal interpretations, the Tribunal set aside the Commissioner (Appeals) orders, allowing the appeals in favor of the appellants.

In conclusion, the Tribunal's judgment clarified the correct classification of services provided by the appellants, emphasizing the distinction between ECIS and Commercial and Industrial Construction Service. The decision underscored the importance of legal precedents and consistent interpretation of tax laws in determining tax liabilities for specific services.