2019 (6) TMI 216 - HC - Service Tax

Exemption from Service tax - Operation and Maintenance Services rendered to CETPs - validity of assessment - HELD THAT - An assessment has to be framed in accordance with law and application of all relevant notifications/circulars/ clarifications issued by the Board/Government. In this case, the eligibility to the exemption sought has not been denied by the department and rightly so. Thus, the defence that the assessment is correct in the light of the assessee non co-operation is not a defence at all, and is rejected. The assessee is engaged in the operation and maintenance of CETPs that are not part of a factory, and in the light of Notifications 25/2012 (20.06.2012), 6/2015 (01.03.2015) and 8/2017 (20.02.2017), the petitioner is entitled to the exemption claimed. The impugned order of assessment in so far as it relates to the issue of service tax on operation and maintenance of CETPs is quashed. Now coming to the assessment itself, since there appear to be other issues that have arisen in the assessment that are not covered by the writ petition, the respondent/department is directed to give effect to the present order by deleting the demand in relation to the activity of operation and maintenance of CETP alone as well as giving credit to any amounts been paid by the assessee, in relation to the aforesaid demand, after due verification of the same and after hearing the petitioner. The aforesaid exercise will be completed within a period of four weeks from date of receipt of a copy of this order. Petition allowed.

Summary

Issues Involved:
Interpretation of service tax exemption for operation and maintenance of waste water treatment plants and common effluent treatment plants (CETPs); Assessment based on non-cooperation of petitioner during adjudication proceedings.

Analysis:
1. The petitioner, engaged in Engineering, Procurement, Erection, Commissioning, and Operation and Maintenance of waste water treatment plants and CETPs, is registered under the Service Tax department. The petitioner claims exemption from service tax for Operation and Maintenance Services provided to CETPs based on Notification No.25/2012-S.T., issued on 20.06.2012, which exempts services related to construction, commissioning, repair, maintenance, and operation of waste water treatment plants, excluding those in factories. The CETPs in question are not situated in factories, clarifying their eligibility for exemption.

2. To address confusion regarding the exemption, Notification No.6/2015-S.T. and No.8/2017-S.T. were issued, confirming that services by operators of CETPs for effluent treatment are exempt from service tax. These notifications clarify that the exemption was applicable from 20.06.2012 until the introduction of Goods and Service Tax on 01.07.2017, ensuring that services by CETP operators remained outside the service tax levy during this period.

3. The respondent raised no serious objection to the petitioner's entitlement to the exemption sought in law. However, the respondent contended that the impugned order was justified due to the petitioner's non-cooperation during adjudication proceedings. Despite the lack of response to show cause notices and absence at proceedings, the assessment must adhere to relevant notifications and clarifications. The department did not deny the petitioner's eligibility for exemption, rejecting the defense of non-cooperation as a valid reason for the assessment.

4. Considering the petitioner's engagement in the operation and maintenance of CETPs outside factory premises and the clarity provided by Notifications 25/2012, 6/2015, and 8/2017, the petitioner is entitled to the claimed exemption. Consequently, the assessment order concerning service tax on operation and maintenance of CETPs is quashed.

5. Regarding the assessment, as other issues beyond the writ petition scope have arisen, the respondent is directed to implement the order by removing the demand related to operation and maintenance of CETPs and crediting any payments made by the petitioner after verification and hearing. This process should be completed within four weeks from receiving the order copy. The writ petition is allowed without costs, and the connected miscellaneous petition is closed.