2023 (11) TMI 257 - AT - Service Tax

Non-payment of service tax - works contract service for the period April 2013 to September 2013 - applicability of N/N. 25/2012 dated 20.06.2012 - HELD THAT - A perusal of the work orders, leaves no manner of doubt that the services were provided by the appellant to a local authority by way of construction, erection, commissioning of pipeline or water supply. Thus, the services provided by the appellant would be exempted under the Notification dated 20.06.2012, keeping in mind the definition of a local authority under section 65B (31) of the Finance Act. The aforesaid position emerges from a perusal of the show cause notice and the order passed by the Commissioner. Thus, even if the appellant had not filed any reply to the show cause notice, the aforesaid fact would have to be taken into consideration for arriving at a conclusion as to whether the services provided by the appellant to the local authority would be exempted from payment of service tax under the Notification dated 20.06.2012. Such being the position, the impugned order dated 31.3.2015 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.

Summary

Issues:
The issue involves the demand of service tax with interest and penalty confirmed by the Commissioner, Central Excise, Jaipur for services provided by the appellant to Municipal Corporations/ Municipal Councils during the period from April 2013 to September 2013.

Summary:

Issue 1: Service Tax Demand
A show cause notice was issued to the appellant alleging non-payment of service tax for providing taxable works contract service from April 2013 to September 2013. The Commissioner confirmed the demand, citing that the work undertaken by the appellant fell within the definition of "works contract services" under the Finance Act.

Issue 2: Exemption under Notification dated 20.06.2012
The appellant claimed exemption under Notification No. 25/2012 dated 20.06.2012, which exempts services provided to the Government, local authority, or governmental authority for construction, erection, commissioning, installation, etc. of pipelines for water supply, water treatment, or sewerage treatment. The appellant argued that as a local authority includes a Municipality or Municipal Committee, they were entitled to the exemption.

Decision:
The Tribunal found that the services provided by the appellant to the local authority were exempted under the Notification dated 20.06.2012, based on the definition of a local authority under the Finance Act. Despite the appellant not filing a reply to the show cause notice, the Tribunal considered the facts and concluded that the demand of service tax was not valid. Therefore, the impugned order confirming the demand was set aside, and the appeal was allowed.