2018 (6) TMI 718 - AT - Service Tax

Erection, Commissioning and Installation Services - whether the appellant is liable to pay service tax on the activity of trenching and laying telephone cables? - Board s Circular No. 123/5/2010-TRU dated 24.5.2010 - Held that - The issue stands covered by the clarification issued vide Board s Circular No. 123/5/2010-TRU dated 24.5.2010 which clarified that laying cables under or alongside roads is not a taxable service. In Commissioner of Central Excise, Chandigarh Vs. Rajeev Electrical Works 2010 (5) TMI 162 - PUNJAB & HARYANA HIGH COURT , the Hon ble High Court has held that laying the pipes in wall/roof/floor for crossing of wires, fixing the junction box, fixing the cables trays to lay the cables, digging the earth to lay the cables and digging the earth pits for earthing etc. would not amount to installation of plant, commissioning and is not leviable to service tax under Erection, Commissioning and Installation Services. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax on trenching and laying telephone cables under the category of 'Erection, Commissioning and Installation Services'.

Analysis:
The appellants were engaged in trenching and laying underground cables and were registered under the category of 'Erection, Commissioning and Installation Services'. The audit revealed that they were not discharging service tax on the gross taxable value. A show cause notice was issued, demanding the differential service tax, interest, and penalties. The original authority confirmed a service tax demand of ?83,23,529 along with interest and imposed penalties. The appellants challenged this before the Tribunal.

The appellant's counsel referred to Board's Circular and judicial decisions to argue that trenching and laying telephone cables do not fall under taxable 'Erection, Commissioning and Installation Services'. The Circular clarified that laying cables under or alongside roads is not a taxable service. Judicial decisions, including one from the High Court, supported the view that activities like laying cables do not amount to installation or commissioning, hence not leviable to service tax under the said category.

After hearing both parties, the Tribunal found that the issue was covered by the Circular and previous judicial decisions. Given the categorical findings that such activities are not taxable under 'Erection, Commissioning and Installation Services', the demand could not be sustained. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The Tribunal also allowed a miscellaneous application filed by the Revenue for a change of cause title.