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TMI Blog2024 (3) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... (AR) for the Appellant Shri Amber Kumrawat, Advocate for the Respondent ORDER RAMESH NAIR The issue involved in the present case is that whether the appellant is liable to pay service tax on the services of laying Pipes were provided to Government of Gujarat under 'Sujalam Sufalam Yojana' and the same was not provided for commercial purpose or otherwise. 2. Shri Ajay Kumar Samota, learned Superintendent (AR) appearing on behalf of the Revenue/Appellant reiterates the ground of the appeal. He submits that for the purpose of laying of pipe line, erection Commissioning and Installation services do not exclude any non commercial activity. Therefore, the learned Counsel relying on the board circular, wrongly dropped the demand. 3. On the other hand, Shri Amber Kumrawat Learned Counsel appearing on behalf of the Respondent/Assessee at the outset submits that the Revenue filed the present appeal only on ground that the judgment whereby the issue is covered in the case of Larsen & Toubro Ltd Vs. CST, 2011 (22) STR 459 (1) has been appealed against by the Revenue before the Hon'ble Gujarat High Court. He submits that merely by filing the appeal the binding effect of the Tribunal orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision, the same does not suffer from any infirmity. The judgment of Larsen & Toubro Ltd is reproduced below:- "3. At the end of hearing, the learned SDR had requested for permission to make written submission, which was granted by the Bench. Accordingly, written submissions were made by the learned SDR and submitted on 11-10-10, which in turn, were forwarded to the learned Advocate appearing for the appellant, by this Tribunal on 9-11-10. The learned Advocate has taken serious objection to this process. He has submitted that because of the complexity involved in the proceedings, oral hearing is prescribed, whereby through dialogue issues can be debated and clarified. He submitted that the issues raised by the department were argued and replied by the appellant's counsel and therefore the department should not have be given another opportunity to make written submissions in writing. However, he has not cited any specific provisions of statute or precedent decisions to support this view. We do not understand how the appellant has been prejudiced by allowing the department to make written submissions especially when the Tribunal has taken care to ensure that copy of the written sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was not for commerce or industry. The Tribunal, in that case, categorically rejected the argument that GWSSB was engaged in commercial activity because it was purchasing water at one price and selling at higher price to others. 7. The learned SDR, on the other hand, submitted that the decision of the Tribunal in the case of M/s. Nagarjuna Construction Co. Ltd. was rendered, relying upon the Tribunal's decision in the case of M/s. Indian Hume Pipe Co. Ltd., reported in 2008 (12) S.T.R. 363 (Tri.-Chennai). It was submitted that the observation of the Tribunal that water supply project being infrastructure facility and civic amenity provided by State in public interest, not an activity of commerce or industry was only obiter dicta. In that case, the Tribunal was dealing with the scope of levy on "erection, commissioning or installation" service and the Tribunal had clearly come to the conclusion that the service provided in that case was not covered by any of the three expressions used in the service and therefore the observation about water supply project had no relevance to the issue to be decided. Learned SDR cited the judgments in the case of M/s. Ulhas Oil & Chemical Indus. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the said Board. In the coming days water could be a precious commodity traded for profit and supply of water entailing that business would constitute 'industry'. However, production of drinking water to the community in Gram Panchayat's and Nagar Panchayats in the State on recovery of user charges at a highly subsidized rate, we find, does not come within the expression 'industry' used in the definition of the taxable entry in question. From the figures of revenue of the Board for the year 2005-06, we find that above 90% of its revenue came from sale of water to local bodies rural population. The revenue was less than l/3rd of the cost incurred to maintain water supply by the Board. The Board is run by substantial amounts released by the State Government as grant every year. These facts show that the pipeline in question were not laid to facilitate any commercial or industrial activity. We find that in the decision of the Tribunal in Indian Hume Pipe Co. Ltd. v. CCE, Trichy reported at 2008 (12) S.T.R. 363 (Tri.-Chennai) which dealt with taxability of long distance pipeline laid by the appellant therein under the entry 'erection, commissioning or installation' of the Act held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our Constitutional scheme, we hold it to be the duty of the judges of the courts and members of the tribunals to make the law more predictable. The question of law directly arising in the case should not be dealt with apologetic approaches. The law must be made more effective as a guide to behavior. It must be determined with reasons which carry convictions within the Courts, profession and public. Otherwise, the lawyers would be in a predicament and would not know how to advise their clients. Subordinate courts would find themselves in an embarrassing position to choose between the conflicting opinions. The general public would be in dilemma to obey or not to obey such law and it, ultimately, falls into disrepute. These are the observations made by the Apex Court in Sundarjas Kanyalal Bhathija v. Collector, Thane, AIR 1990 S.C. 261." 11. Therefore, the question arises as to whether we should refer this issue to Larger Bench. At this juncture, it would be worthwhile to consider the decision cited by the learned SDR to support his view. In the case of Madhya Pradesh State Electricity Board, Hon'ble Supreme Court was considering whether an office of a lawyer or firm of lawyers is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for them and used for carrying the water meant for sale to Panchayat, local body etc. can be said for "commerce". 15. The submissions made to support the view that GWSSB is a commercial organization in the impugned order and the submissions made before us are : (i) Water was purchased @ Re. 1/- per ltr. and sold from the price @ Rs. 2/- per ltr. to Panchayats to price @ Rs. 15/- per ltr to industrial units. Thus, water was being sold at a much higher rate and therefore just because the charges levied were fixed by Government, it does not take away the essential character of the activity, which is "commerce". The examples of the oil companies, power utility companies were cited to show that just because Government fixes the rate and there is a cross-subsidy, the charges cannot be said to be non-commercial. (ii) It was also said that GWSSB was covered under Industrial Dispute Act, 1947 and therefore is industry. (iii) GWSSB was authorized to raise money and also to give loans to Government or local bodies. Therefore, it can be seen that GWSSB is functioning like any commercial entity by raising money from banks and financial institutions, advancing loans and recovering inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o profit and loss account; auditors clearly observe that annual report complies with the accounting standards applicable to non-commercial, non-business entities and have raised no objection to the procedure adopted by the Board. The annual report would have been placed before Government of Gujarat. Under these circumstances, we fail to understand how we can consider GWSSB as a commercial organization or the purpose of pipeline laid for them by various contractors as one for commerce i.e. to say to buy and sell water. The name of the scheme for which pipeline was laid was also Mehsana District Water Supply Scheme. 17. The next question that is to be answered is whether the pipeline can be said to have been used or used primarily for commerce or industry. The only point that has been stressed by the Revenue is that the GWSSB is buying water @ Re. 1/- per ltr. and selling at Rs. 2/- per ltr. to Rs. 15/- per ltr. The definition uses words "used for commerce" or "primarily used for commerce". This would mean that Revenue is required to show that the purpose of construction of pipelines is for "commerce" or "primarily for commerce". "Commerce" would mean buying and selling not necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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