2012 (11) TMI 611 - AT - Service Tax

Erection, Commissioning or Installation Service appellants are registered as Government Civil Contractor and engaged in the activity of providing, lowering and laying of sewerage and water supply pipeline including construction of chambers, operation, maintenance and repair work to water supply distribution network, underground drainage work etc. to various Government bodies - Held that - Water supply project is an infrastructure facility and a civic amenity which the State provides in public interest and not an activity of commerce or industry. Therefore, the appellants are not covered under the category of Erection, Commissioning or Installation Services Regarding GTA service - as per the Notification No. 32/04 the appellants are entitlement for seventy five per cent abatement received under GTA services - they have already paid the service tax on twenty five per cent of the amount paid as GTA service by claiming abatement as per Notification No. 32/2004

Summary

Issues:
Appeal against confirmation of demand under Erection, Commissioning or Installation Service (ECIS) under Section 65 of the Finance Act.

Analysis:
The appellants, engaged in activities related to sewerage and water supply pipeline construction, were issued a show-cause notice demanding service tax for various services provided. The demand was confirmed under Goods Transport Agency Services. The appellants contended that their activities did not fall under ECIS, citing a precedent case. They also argued for abatement under Notification No. 32/2004 for GTA services.

Upon hearing both sides, the Tribunal found that the appeal could be disposed of directly. The Counsel for the appellants referenced a case where it was held that water supply projects are not commercial activities, leading to a decision that the appellants' activities did not qualify as ECIS. The Tribunal agreed with this interpretation and set aside the demand under ECIS.

Regarding the abatement claim for GTA services, the Tribunal acknowledged the entitlement of the appellants to seventy-five percent abatement as per Notification No. 32/2004. The appeal was allowed on this account. It was noted that the appellants had already paid service tax on twenty-five percent of the GTA amount. Any discrepancies in demand computation were to be communicated to the appellants for payment within a specified timeframe.

In conclusion, the appeal against the demand under ECIS was set aside, and the appellants' entitlement to abatement for GTA services was upheld. The appeal and stay application were disposed of accordingly.