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TMI Blog2008 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... use in water supply projects. The department collected details of works contracts executed by IHPL for TWAD during the period 1.7.03 to 30.9.06. After due process of law, the Commissioner found that the assessee had rendered taxable services under the category 'Commissioning or Installation' during 1.7.03 to 9.9.04 and 'Erection, Commissioning or Installation' during the period 10.09.04 to 30.09.06. The activity of erection/commissioning/installation of the pipelines and related structures was undertaken in respect of plants and was liable to service tax. As there was no evidence that some other contractor had paid service tax on the bills raised by the assessee, the Commissioner demanded service tax of Rs. 1,78,23,890/- (including education cess), interest due thereon under Section 75 of the Act, imposed penalties @ 20% per month/Rs. 200 per day till the date of payment of tax under Section 76 of the Act, penalty of Rs. 1000/- under Section 77 of the Act and penalty of Rs. 1,78,23,890/- on IHPL under Section 78 of the Act. 2. The instant appeal challenges the above order. It is submitted that the notice did not specify the activity sought to be taxed under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of a Booster pump, Air conditioner, Water filter, Water heater etc. would be covered in the definition and be taxable as all these things are machinery or equipment and decided that activity of laying pipelines would be covered under taxable head of 'erection, installation or commissioning' service. This was erroneous. 3.1 A pipeline could not be installed or commissioned. A pipeline was constructed part by part. The equipments mentioned in the Board's Circular could be installed as such. The Commissioner failed to appreciate the distinction. From 10.09.04 to 15.06.05 'Erection' service was added to the existing services of 'installation and commissioning' with effect from 10.09.04. As per Concise Oxford Dictionary erection meant the act of erecting, and erect meant construct (a building, wall, etc.). As per Cambridge International Dictionary of English 'erection is the act of making or building a structure'. Erection was an activity which preceded installation and commissioning of a plant, machinery or equipment. Installation of an equipment or machinery was undertaken on a pre-existing machine. Erection was the act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were fixed only for regulation and monitoring flow of water through the said pipeline. The said sumps and pump sets etc. were part of construction of pipeline. The SCN and order suggested that the activity of the appellants was covered under Sub-clause (b) of clause (ii) of the definition from 16.06.05. 'Plumbing' and 'drain laying' figured alongwith air conditioning system lifts, electronic devices including wiring etc. - The legislative intention was therefore clearly to cover only such installations within a commercial or residential building. 4.1 By 2004 Finance Act, a new service under the head 'construction service' was introduced with effect from 10.09.04. This service was defined to mean construction of new building or civil structure or a part thereof. Section 65 (30a) of the Act defined construction service as under:- 'Construction service means,- a) construction of new building or civil structure or a part thereof; or b) repair, alteration or distoration of, or similar services in relation to, building or civil structure, but does not include road, airport, transport terminal, bridge, tunnel, long distance pipeline and dam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps and where IHPL was the main contractor. 7. The Ld. Consultant for the Revenue argued that the pipelines supporting machinery like pumps etc., sumps and other supporting civil structures built by the assessee could very well be called a plant. The Commissioner had held that activities rendered by the appellants would be covered within the meaning of erection, commissioning or installation service and the corresponding entry since 1.7.03. Argument that the pipeline was not installed or commissioned by IHPL was misleading. The activity involved laying, jointing, testing and commissioning of PVC pipes which resulted in emergence of a pipeline. The works contract between IHPL and its clients against the turnkey contracts prescribed completing the entire work satisfactorily and commissioning within the stipulated period and maintaining the scheme for the specified period. Pipes were used for transporting water for distribution and hence fell within the definition of equipment. Equipment was a set of necessary tools, clothing etc. for a particular purpose. The exclusion of long distance pipeline from construction service did not mean that same item could not be charged to tax unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services provided, whether or not the services are provided by a person in his capacity as a subcontractor and whether or not such services are used as input services'. It showed that IHPL as subcontractor was also liable to pay tax on the services provided. As regards, Rishivandiyam WSS executed as a subcontractor IHPL claimed that the work was completed on 30.06.03. IHPL had not furnished any conclusive evidence in support of the above claim. The letter dated 26.04.03, of L T to IHPL cited as evidence was their internal correspondence.' 7.2 Appellant had not furnished returns for the material period or disclosed truly all material facts for verifying assessment. Larger period for demanding service tax not paid was correctly invoked in terms of Section 73 of the Act. Penalties were also correctly imposed. Section 73 did not contain rigorous conditions as in Section 11A of the Central Excise Act proviso. Omission or failure of the assessee in the matter of filing return was enough to invoke extended period. Ld. Consultant relied on 2008 (86) RLT 438 (CESTAT-Del.) = 2008-TIOL-671-CESTAT (Del.), wherein the filing of returns with some bills and abstract of the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h would refer to putting up civil structures. Commissioning of a plant would mean operationalising an installed plant/equipment/machinery. Where as erection became part of the entry only from 10.09.04, from 16.06.05 onwards meaning of 'erection, commissioning or installation' [section 65 (39a)] was enlarged to include installation of various devices and equipments. An entry plumbing, drain laying, or other installation for transport of fluids was introduced under Sub-section (ii) (b). The impugned order found that the service involved was specifically covered from 16.06.05 under the same head by the entry plumbing, drain laying, or other installation for transport of fluids . We are inclined to agree with the appellants that this entry covers such facility provided in a building as it appears in the company of air conditioning system, lifts, electronic devices including wiring etc. which are installed in a building. The Commissioner found that plant represented a fixed investment for carrying out certain institutional activity for business . The Ld. Consultant for the department has tried to defend the interpretation of the Commissioner of the expression plant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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