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2025 (2) TMI 143 - AT - Service TaxExemption from service tax under N/N. 25/2012-ST dated 20.06.2012 - services provided by M/s. Shree Hindustan Fabricators to Surat Municipal Corporation (SMC) with regard to water supply - HELD THAT - The matter is no longer res-integra as this Tribunal in case of C.C.E. S.T. -SURAT-I VERSUS SHREE HINDUSTAN FABRICATOR 2024 (12) TMI 1240 - CESTAT AHMEDABAD (the appellant themselves) has decided the issue in the favour of the respondent/assessee. It was held in the said case that We are therefore of the view that provisions of the Notification No. 25/2012-ST dated 20.06.2012 under serial no. 12E and Serial No. 25A are fully applicable applicable towards activity undertaken by the respondent assessee and therefore fall under the category of the exempted services. Conclusion - The exemption for services provided to SMC under Notification No. 25/2012-ST upheld emphasizing the non-commercial nature of the services. Appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core issues considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Exemption under Notification No. 25/2012-ST - Relevant legal framework and precedents: The exemption under Notification No. 25/2012-ST applies to services provided to the government, local authority, or governmental authority concerning water supply, public health, sanitation, etc. The Circular No. 199/09/2016 further clarifies the scope of these exemptions. - Court's interpretation and reasoning: The Tribunal agreed with the Commissioner (Appeals) that the services provided to SMC are exempt as they pertain to public utilities and infrastructure, which are not commercial or industrial activities. - Key evidence and findings: The Tribunal noted that SMC, being a statutory body, provides essential services like water supply, which are considered civic amenities rather than commercial activities. - Application of law to facts: The Tribunal found that the services provided by the respondent were covered under the exemption entries of the notification, as the primary purpose was non-commercial. - Treatment of competing arguments: The Tribunal dismissed the department's argument that the services were for commercial purposes, citing the nature of SMC's operations and prior judicial findings. - Conclusions: The services provided by the respondent to SMC are exempt from service tax under the relevant notification. Reliance on Prior Tribunal Decisions - Relevant legal framework and precedents: The cases of Indian Hume Pipe Co. Ltd and Nagarjuna Construction were cited to argue the classification of services and the nature of the entities involved. - Court's interpretation and reasoning: The Tribunal found these precedents applicable, as they similarly dealt with services provided to governmental bodies for public utilities. - Key evidence and findings: The Tribunal emphasized that the nature of the services and the entities involved in prior cases were comparable to the present case. - Application of law to facts: The principles from these cases were deemed relevant and applicable to the current scenario, supporting the exemption claim. - Treatment of competing arguments: The Tribunal refuted the department's claim that these cases were factually distinct, highlighting the commonality in service nature and purpose. - Conclusions: The Tribunal upheld the reliance on these precedents, affirming the exemption applicability. Classification of Services - Relevant legal framework and precedents: The classification under "Erection, Commissioning or Installation Service" was scrutinized based on the definitions and judicial interpretations. - Court's interpretation and reasoning: The Tribunal agreed with the respondent that the services did not fit this classification, as they were related to public utility infrastructure. - Key evidence and findings: The Tribunal noted that the activities involved were typical of infrastructure development, not commercial installations. - Application of law to facts: The Tribunal concluded that the services were not taxable under the claimed category, supporting the exemption claim. - Treatment of competing arguments: The Tribunal dismissed the department's classification argument, emphasizing the civic nature of the services. - Conclusions: The services do not fall under the taxable category as argued by the department. Nature of Surat Municipal Corporation - Relevant legal framework and precedents: The definition of a government, local authority, or governmental authority was pivotal in determining the exemption's applicability. - Court's interpretation and reasoning: The Tribunal confirmed that SMC qualifies as a local authority, thus eligible for the service tax exemption. - Key evidence and findings: The Tribunal highlighted SMC's statutory role and non-commercial objectives in water supply and public utilities. - Application of law to facts: The Tribunal applied the exemption criteria to SMC, affirming its qualification as a local authority. - Treatment of competing arguments: The Tribunal rejected the department's assertion of SMC's commercial operations, focusing on its primary public service role. - Conclusions: SMC is a local authority, and the services provided are exempt from service tax. 3. SIGNIFICANT HOLDINGS - The Tribunal upheld the exemption for services provided to SMC under Notification No. 25/2012-ST, emphasizing the non-commercial nature of the services. - It confirmed the applicability of prior Tribunal decisions, reinforcing the exemption's validity. - The Tribunal dismissed the department's classification of the services as taxable under "Erection, Commissioning or Installation Service." - The Tribunal affirmed SMC's status as a local authority, qualifying for service tax exemptions. - The appeal by the department was dismissed, and the order-in-appeal was upheld, confirming the exemption for the respondent's services.
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