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2010 (5) TMI 162 - HC - Service TaxInstallation and Commissioning Service - Whether the activities like laying the pipe in wall / roof / floor for crossing of wires, fixing the junction box, MS box, Wooden Box, fixing the cables trays to lay the cables, digging the earth to lay the cables and digging the earth pits for earthing of equipments fall within the scope of erection and thus liable to Service Tax in the category of erection, commissioning or installation with effect from 10.9.2004? Held that as laying the pipe in wall/roof/floor for crossing of wires, fix the junction box etc. would not amount to installation of plant, commissioning, machinery and equipment, therefore, service tax was not leviable in this regard - , as per circular bearing No.62/11/2003 dated 21.8.2003, it has clarified that putting up electric wires and fitting in residential premises would not be covered in the definition of taxable service and thus not liable to tax. Meaning thereby, no incidental service in relation to the installation of plant, commissioning, machinery and equipment, was taxable, during the relevant period with effect from 1.7.2003. The Tribunal has rightly held that the assessee is not liable to pay service tax as it has not erected or commissioned or installed any plant, machinery or equipment.
Issues involved: Determination of liability to pay service tax for activities related to erection, commissioning, and installation services.
Analysis: 1. The case involved an appeal filed by the revenue against the Customs, Excise and Service Tax Appellate Tribunal's order, which favored the assessee regarding the liability to pay service tax for specific activities. The revenue contended that the assessee should have paid service tax from 1.7.2003, while the assessee argued that the activities in question did not fall under the category of installation of plant, commissioning, machinery, or equipment. 2. The assessee, an electrical contractor, was registered in 2004 for providing erection, commissioning, and installation services. The revenue claimed that the assessee started paying service tax from December 2004, despite the service being taxable from July 2003. A show cause notice was issued to recover the service tax along with interest and penal action for non-compliance with the Act and Rules. 3. The assessee contended that the activities it performed, such as laying pipes and fixing junction boxes, did not constitute installation of plant, commissioning, machinery, or equipment, and hence, no service tax was due. The Assessing Authority confirmed a demand for service tax for a specific period, but dropped the proposal for penal action. 4. The assessee's appeal was dismissed by the Commissioner (Appeals), but the Customs, Excise and Service Tax Appellate Tribunal accepted the appeal, leading to the revenue's appeal before the High Court. 5. The High Court analyzed the definition of "erection, commissioning or installation" under the Act, emphasizing that the revenue failed to provide evidence that the assessee's activities amounted to installation of plant, machinery, or equipment. The Court noted that no incidental service related to installation was taxable during the relevant period as per a circular, and the assessee had not provided such services. 6. Ultimately, the High Court held that the activities performed by the assessee, such as laying pipes and fixing junction boxes, did not amount to commissioning or installation of plant, machinery, or equipment. Consequently, the Court ruled in favor of the assessee, dismissing the revenue's appeal. 7. The judgment highlighted the lack of evidence supporting the revenue's claim that the assessee's activities warranted the payment of service tax. The Court's decision was based on a thorough analysis of the relevant legal provisions and the specific nature of the services provided by the assessee, ultimately leading to the dismissal of the revenue's appeal. 8. The judgment provided clarity on the scope of taxable services related to erection, commissioning, and installation, emphasizing the importance of meeting specific criteria to establish liability for service tax. The Court's detailed reasoning and interpretation of the law ensured a fair and just resolution of the dispute between the revenue and the assessee.
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