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TMI Blog2018 (5) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... ration presupposes a certain level of reciprocity. In the instant case it is TWAD who wants to ensure the quality of the pipes used in the Water Supply and Drainage Schemes floated by them. Therefore it cannot be said that the testing is done for the contractor and that a service is rendered to him. The testing fee therefore does not take the colour or character of ‘consideration’. There is no ‘service’ rendered by TWAD to the contractor and the fees collected is not a consideration that can be subject to levy of service tax under the Finance Act, 1994 - Appeal allowed - decided in favor of appellant. - Appeal No. ST/CO/023/2011, ST.434/2011 - - - Dated:- 1-5-2018 - Hon ble Ms. Sulekha Beevi C.S. Member (Judicial) And Hon ble Shri Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity of testing rendered by respondent is not a statutory duty and therefore the testing charges collected are not statutory fees. Though the pipelines are tested for the ultimate benefit of the public, there is a service provider service recipient relationship between respondent and contractors. Only after testing, the contractor can use the pipes for execution of work order and therefore the testing is a service provided to the contractor. That Commissioner (Appeals) has erroneously placed reliance on Circular No.89/7/2006 dt.18/12/2006, and has set aside the demand without proper appreciation of facts and evidence. 3. The Ld.Counsel, Sh.Raghavan Ramabhadran appeared on behalf of respondent and argued the matter. His submissions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) the Hon ble Tribunal was considering the activity of erection of sluice gates in the agricultural dams constructed by the various corporations, on which service tax had been demanded under the head erection, commissioning and installation service . It was noted that the Chief Engineer, Water Resources Department of the Government of Maharashtra is not a commissioning and installation agency as they do not undertake these activities for anybody else except themselves. There is no Quid Pro Quo : it is not a case where the contractor requests or requires such testing to be done, which the Respondent acquiesces to. Therefore, costs recovered for testing is not consideration. 3.3 Respondent submitted that the quality assessment testing is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such money would be deposited in the Board funds. Therefore, the testing charges are statutory in nature. Further, Section 23 of the TWAD Act stipulates that all costs incurred by the Board shall be reimbursed by the local authority on whose behalf the scheme is implemented. Thus, the testing charges paid to the Respondent are statutorily provided for and these charges paid by contractor to TWAD are reimbursed to the contractor by the local authority. 4. Heard both sides. 5. The Commissioner (Appeals) has set aside the demand mainly on two grounds. Firstly, that the testing done by TWAD is a statutory duty and the fees collected is a statutory fees. Secondly, that there is no service provider service recipient relationship between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. An activity done without such a relationship i.e., without the express or implied contractual reciprocity of a consideration would not be an activity for consideration even though such an activity may lead to accrual of gains to the person carrying out the activity. It is beautifully illustrated by the following example : There can be many activities without consideration. An artist performing on a street does an activity without consideration even though passers by may drop some coins in his bowl kept after feeling either rejoiced or merely out of compassion. They are, however, under no obligation to pay any amount for listening to him nor have they engaged him for his services. On the other hand if the same person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der conforming to the relevant description in the charging section performs an activity that conforms to the relevant description in the charging section on the request, and for the benefit, of a recipient conforming to the relevant description in the charging section. Service, its taxability and the provision of the taxable service to a recipient, in that order, are necessary pre-requisites to ascertaining the quantum of consideration on which ad valorem tax will be levied. This fundamental will not alter in the scheme of the negative list too; a service that is clearly identifiable has to be provided or agreed to be provided before it can be taxed. The factual matrix of the existence of a monetary flow combined with convergence of two ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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