2018 (7) TMI 1785 - AT - Service Tax

Erection Commissioning & Installation Service - laying of Optical Fiber Cables & Outdoor Up-gradation Works Execution of Repair & Maintenance thereof - C.B.E.C. Circular dated 24/05/2010 - Held that - At Para 3 of the said Circular one table is provided and under the said table Serial No. 1 covered the activity of shifting of overhead cables/wires and Serial No. 2 covered the activity of laying of cables under or alongside roads and it was clarified that the said activity does not attract Service Tax - laying of fresh cable is also clarified to be out of the Service Tax levy - demand cannot sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of C.B.E.C. Circular dated 24/05/2010 regarding liability to pay Service Tax for laying of Optical Fiber Cables.
2. Applicability of Service Tax under the category of "Erection, Commissioning & Installation Service" for laying new cables.

Analysis:
1. The appeal was filed by Revenue against the Order-in-Appeal passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Lucknow. The issue revolved around the demand of Service Tax raised against the respondent for laying Optical Fiber Cables. The ld. Commissioner (Appeals) dropped the demand based on C.B.E.C. Circular No. 123/5/2010-TRU, dated 24/05/2010. The Revenue contended that the Circular was specific to shifting of cables, not laying new cables. However, the Tribunal noted that the Circular exempted laying of cables under or alongside roads from Service Tax, thus upholding the Order-in-Appeal and rejecting the appeal by Revenue.

2. The respondents were engaged by M/s BSNL for laying Optical Fiber Cables and Outdoor Up-gradation Works. The demand of Service Tax was confirmed by the Adjudicating Authority under the category of "Erection, Commissioning & Installation Service." The ld. Commissioner (Appeals) dropped the demand based on the Circular, stating that laying of new cables was also exempted. The Tribunal referenced a previous case involving M/s Raj Electric Works where it was held that laying of Optical Fiber Cables did not attract Service Tax. Upon examining the Circular and the facts, the Tribunal concluded that laying of fresh cables was clarified to be outside the Service Tax levy, thereby affirming the Order-in-Appeal and dismissing the appeal by Revenue.

This detailed analysis highlights the core issues of interpretation of the Circular and the applicability of Service Tax for laying new cables, ultimately leading to the Tribunal's decision in favor of the respondent based on the exemption provided in the Circular.