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TMI Blog2023 (11) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry. The Board was sustaining on the grants released by the State Government. It was therefore concluded that the pipelines were not laid to facilitate any commercial or industrial activity. Thus, it is settled that service of laying of pipeline for Gujarat Water Supply Sewerage Board (GWSSB) is not falling under the service of industrial or commercial construction service. In the present case also since the appellant is not liable to pay the service tax they are legally entitled for the refund of service tax already paid - there are no infirmity in the order of the Commissioner (Appeal) - appeal of Revenue dismissed. - MR. RAMESH NAIR , MEMBER (JUDICIAL) AND MEMBER (TECHNICAL), MR. C L MAHAR Shri Rajesh K Agarwal, Superintendent (AR) for the Appellant Shri Rahul Patel Chartered Accountant for the Respondent ORDER This appeal is filed by the Revenue challenging the order-in-appeal passed by Commissioner(Appeal). Whereby the Learned Commissioner (Appeal) held that laying of pipeline for the project of Gujarat Water Supply Sewerage Board (GWSSB) is not taxable under Industrial or Commercial Construction Service and consequently, the Service Tax p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructed by M/s. BMS Projects Pvt. Ltd. for M/s. GWSSB for transporting the traded water, falls within the scope of the expressions used, occupied, or engaged, primarily in, commerce of industry or work intended for commerce or industry as specified in the above mentioned definition of Commercial or Industrial Construction Service? (iv) Whether CESTAT was justified in treating the activities of M/s. GWSSB as not being commercial or industrial activities or that the usage of Pipelines laid by M/s. BMS Projects Pvt. Ltd., were not for use in commerce or industry? (v) Whether CESTAT was justified in holding that all activities which are concerned with welfare of citizens are excluded from liability of Service tax? and (vi) Whether in the facts and circumstances of the case, CESTAT was justified in setting aside the Order-in-Original passed by the Commissioner and in allowing the appeal filed by M/s. BMS Projects Pvt. Ltd.? 2. Respondent is engaged in providing construction services, for which purpose, it is registered in the category of commercial or industrial construction service with the Central Excise Authorities. Issue pertains to levy of service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal noted the definition of commercial or industrial construction service provided under Section 65(25b) of the Act, which reads as under : Commercial or Industrial Construction Service means - (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is - (i) used, or to be used, primary for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. 3. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd maintenance of sewerage system. The usage charges recovered by the Board from Gram Panchayats, Nagar Palikas and Nagar Panchayats are at highly subsidized rates and therefore, cannot be considered as an industry in the sense that the said word is used in the definition of taxable entry. The Board was sustaining on the grants released by the State Government. It was therefore concluded that the pipelines were not laid to facilitate any commercial or industrial activity. 5. We are broadly in agreement with the view of the Tribunal. The Tribunal noted the purpose for which the Board was constituted and its nature of activities. The pipelines constructed were for providing drinking water facilities to the people of the State through different Gram and Taluka Panchayats. Only a small portion of the water was provided to the industries at commercial rates. 6. In the result, no question of law arises. Tax Appeal is dismissed. In the case of Dinesh Chandra Aggarwal Infracon P. Ltd this Tribunal has passed the following decisions: 11. After carefully appreciating the submissions made by both the sides, we find that there is no dispute about the legal position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees and charges of water supply and sewerage systems, in the areas comprised within the sphere of operation of the water supply and sewerage services of the Board and in the areas of the local bodies which have entered into an agreement with the Board; (e) to assess the requirements of materials and arrange for their procurement and utilization; (f) to establish State standards for water supply and sewerage services; (g) to review annually the technically financial, economic and other aspects of water supply and sewerage system every scheme of the Board or the local bodies which have entered into an agreement with the Board; (h) to establish and maintain a facility to review and apprise the technical, financial, economic and other pertinent aspects of every water supply and sewerage scheme in the state; (i) to operate, run and maintain any water works and sewerage system, if and when directed by the State Government, on such terms and conditions and for such period as may be specified by the State Government. (j) to assess the requirements for man-power and training in relation to water supply and sewerage services in the State; (k) to car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erground sumps, overhead tanks, distribution networks and village level sumps, etc. The cost of supplying drinking water thus incorporates raw water cost, filtration cost, pumping cost and all service charges related to this activity. The actual service cost has been, even if capital cost of infrastructure is not accounted, is high enough that the beneficiary people may not afford. However, with a view to create a sense of responsibility and awareness towards the services amongst the people for its economic use, the State Government has imposed a nominal charge to the beneficiary panchayat. However, it is not sufficient enough to recover even the operating cost. Thus the Gujarat Water Supply Sewerage Board cannot be treated as a commercial organization, selling drinking water to the community. This is a service sector establishment for fulfilling the needs of the people for this basic requirement. 15. Inasmuch as the second limb of definition of Commercial or Industrial Construction service do not stand satisfied, we hold that the services provided by the appellants are not covered under the said services and no service tax is required to be levied. Accordingly, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax. Therefore, strictly speaking, by Revenue s own submissions, the status of GWSSB is not relevant. Nevertheless, this issue as to whether the GWSSB can be considered as a commercial organization, was discussed in detail in M/s. Nagarjuna Construction Co. Ltd. case and we agree with the views taken in that case. The Gujarat Act No. 18 of 1979, under which GWSSB was set up has a preamble which reads as An Act to provide for the establishment of a Water Supply Sewerage Board for the rapid development and proper regulation of water supply and sewerage services in the State of Gujarat. The responsibility of the Board is rapid development and proper regulation of water supply and sewerage services and not commercial or industrial activity. The provision in the act enabling the Board to borrow money or lending money or receiving grant for entering into contract, have been incorporated to serve the purpose for which the Board has been set up. The objective is to execute water supply and sewerage work for the benefit of both rural and urban communities as mentioned by Member Secretary in his letter dt. 14-6-07. A perusal of the Annual Report of the company would show that there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling and the other purposes also may be served incidentally. In this case, purchase and sale of water are incidental and the main purpose is supply of water to needy citizens of the State. 18. In view of the above discussion, we do not find any reason for us to disagree with the views already taken by the Coordinate Bench of this Tribunal in case of M/s. Nagarjuna Construction Co. Ltd. Accordingly, the impugned order cannot be sustained and is set aside. 19. In view of the fact that the appeal is allowed on merit, there is no need to discuss the applicability of extended period and the question of imposition of penalty also does not arise. For the same reason, other grounds canvassed viz. the service is Works Contract and therefore was not liable to Service Tax earlier, is also not required to be considered. In view of the above discussion, we do not consider it necessary to consider other issues raised or decisions cited before us. 20. In the result, appeal is allowed with consequential relief. 4.1 In view of the above judgments, particularly the Hon ble jurisdictional High Court of Gujarat in the case of BMS project Pvt. Ltd. (Supra) as of now it is sett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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