2018 (4) TMI 671 - AT - Service Tax

Erection, commissioning and installation Service - agreement with Vidarbha Irrigation Development Corporation for providing and laying of M.S Pipe line in two rays for Rising main of Paghora Lift Irrigation Scheme under Gosikhurd Project - Held that - the Tribunal in Appellant s own case Shonan Siddarth JV 2016 (12) TMI 485 - CESTAT MUMBAI has held that the services are covered under the category of Commercial or Industrial Construction Service - in CBEC Circular No. 116/10/2009 ST dt. 15.09.2009 the intention of the government is clear that the contracts towards commerce or industry are liable for tax. In the present case the pipelines were laid for Maharashtra Government and the contract as awarded by Vidharbha Irrigation Development Corporation, Nagpur for irrigation purpose. Thus the contract has no relation with industry or commerce - the activity of the Respondent is not liable for any service tax. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the service provided by the respondent is liable for service tax under the category of "Erection, commissioning and installation" or "Construction of Pipeline or Conduit"?
2. Whether the service provided falls under the definition of "Commercial or Industrial Construction Service" as per Circular No. 116/10/2009 – ST dated 15.09.2009?
3. Whether the contract for laying pipelines for the Maharashtra Government is related to industry or commerce, making it liable for service tax?

Analysis:
1. The appeal was filed by the revenue against the Commissioner (Appeals) Nagpur's order confirming the service tax liability on the respondent for providing and laying M.S Pipe line. The Commissioner held that the service falls under "Construction of Pipeline or Conduit" as per Section 65 of the Finance Act, 1994. The revenue contended that the service resulted in an erected structure with installation of machinery and does not involve activities related to buildings or civil structures. However, the Tribunal in the appellant's own case previously held that the services are covered under "Commercial or Industrial Construction Service."

2. The Circular No. 116/10/2009 – ST dated 15.09.2009 clarified the leviability of service tax on construction activities. It stated that the essence of "commercial or industrial construction service" is chargeable to service tax if used, occupied, or engaged primarily for commerce or industry. However, constructions like canals built by the Government for non-commercial purposes are not liable for service tax. In the present case, the pipelines were laid for irrigation purposes by the Maharashtra Government, indicating no relation to industry or commerce. Therefore, the service provided by the respondent is not liable for any service tax.

3. The contract awarded by Vidarbha Irrigation Development Corporation for laying pipelines for irrigation purposes under the Gosikhurd Project was not related to business or commerce. As per the Circular, works contract in respect of dams, irrigation projects, and other specified constructions executed through turn-key or EPC mode are exempt from service tax. Since the contract in this case was not for commercial purposes, the activity of the respondent is not liable for service tax. Consequently, the impugned order was upheld, and the appeal filed by the revenue was dismissed.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the Tribunal.