2013 (8) TMI 373 - AT - Service Tax

Erection, Commissioning and Installation Service - appellant contended that they are Government department and they have undertaken the work of erection of sluice gates for the dams constructed by the aforesaid Corporations which are also statutory corporations of the Government of Maharashtra Held that - Assessee was not into commissioning and installation agency envisaged under Section 65 (29) - they are not rendering service to anybody else except to themselves - both the provider of service and recipient of the service are part and parcel of the Government of Maharashtra thus service to self cannot be considered s a taxable service. As clarified by CBEC vide circular No. 790/09/2004 dated 17/09/2004 erection of structures referred to therein means civil corks to installation / commissioning of a plant and machinery. Agricultural dam or sluice gates thereto cannot be considered as a plant and machinery or equipment or structures thereof. They are in the nature of infrastructural construction catering to the needs of agriculture. They are excluded from the purview of service tax levy both under the category of commercial and industrial construction service and Works Contract services specifically. Waiver of Pre deposit court allowed waiver on pre deposit stay granted.

Summary

Issues:
Three appeals against Orders-in-Original passed by the Commissioner of Central Excise, Nagpur/Nashik regarding liability to pay service tax for erection of sluice gates in dams by the Chief Engineer of the Water Resources Department of the Government of Maharashtra.

Analysis:
The appellant, being the Chief Engineer of the Water Resources Department of the Government of Maharashtra, undertook the erection of sluice gates for dams in various districts. The department alleged liability for service tax under "Erection, Commissioning and Installation Service" and imposed substantial demands, interest, and penalties. The appellant contended that as a government department providing services to itself, the activities were not taxable. The Revenue, represented by the Commissioner (AR), supported the lower authorities' findings.

Upon examination, the Tribunal noted that the appellant's activities involved erecting sluice gates in agricultural dams, which did not fall under the definition of "plant, machinery, equipment, or structures" as per relevant sections of the Finance Act, 1994. The Chief Engineer was not a commissioning and installation agency providing services to others but was serving the Government of Maharashtra internally. The Tribunal referred to a CBEC circular clarifying that structures mentioned in the Act pertained to civil works related to plant and machinery, excluding infrastructural constructions like agricultural dams and sluice gates. Consequently, these activities were excluded from service tax under commercial and industrial construction services and Works Contract services.

Based on the above analysis, the Tribunal found merit in the appellant's argument and granted unconditional waiver from pre-deposit of the dues adjudged, staying the recovery during the pendency of the appeals. The Tribunal concluded that the appellant had presented a strong case in their favor, highlighting the non-taxable nature of the services provided by the Chief Engineer within the government setup.