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TMI Blog2024 (12) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... xempted services. In view of the above decision of the Gujarat High Court in BMS Projects Pvt Ltd vs Commissioner of Central Excise-Surat [ 2017 (9) TMI 1386 - GUJARAT HIGH COURT] and as well as by perusal of the mega N/N. 25/2012 dated 20.06.2012. There are no doubt that the activity undertaken by the respondent assessee falls under the category of exempted services. Since the facts in the present appeal are similar to the one which have been decided in the above cited decision of the Hon'ble Gujarat High Court. The appeal filed by the revenue does not have any merit, therefore the same is set aside. Appeal dismissed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C. L. MAHAR, MEMBER (TECHNICAL) Shri Tara Prakash, Deputy Commissioner (AR) for the Appellant Shri Amber Kumrawat, Advocate for the Respondent ORDER The brief facts of the matter are that the appellant have undertaken the work of fixing and laying of the pipelines for water supply and drainage to Surat Municipal Corporation and Ors. The appellant has claimed the benefit of Notification No. 25/2012 dated 28.06.2012 under which the services provided by the appellant for government and its agencies are exempted from ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... segregate services to residential and industrial/commercial customers (para 14.3 of the Order-in-Original). It is submitted that Circular No. 199/09/2016 service tax dated 22.08.2016 is specifically as regards contractor providing services of construction of tube wells. 13. The Commissioner (Appeals) have also erred in not considering the judgement cited by the adjudicating authority in case of Graphite India Ltd. Vs. CCE, Nashik [2014(36) STR 948(Tri-Mumbai)] where it was challenged that pipeline laid for Government of Gujarat undertaking GIDC for providing water supply and so not liable to pay Service tax. It was held by hon'ble Tribunal that GIDC has been set up to establish and organize areas/centres for commercial purpose or industries in state of Gujarat. The pipelines are for supply of water to industrial units and commercial establishments. Therefore, it has been held that the assessee were liable to discharge service tax liability on consideration received in respect of such activities (para 5.3 of the cited case law). 4. We have heard both the sides and perused the records of the appeal. We are of the view that, it will be appropriate to first have a glance at the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand of service tax merely on the ground that the services of 'fixing and laying of pipelines for supply of water and drainage' provided by the appellant to the SMC, were used for commerce or industry. Since the Order in Original is not sustainable on merits, I do not go into the other contentions raised by the appellant on Limitation, Interest and penalty. 4.1 From the facts of the matter, it can be seen that the appellant has been provided services of lying down the water supply pipelines and sewerage discharged pipeline etc. for Surat Municipal Corporation which is a statutory body and not a profit making organization. we are of the view that the services provided by SMC are of non commercial nature and the water pipeline which have been laid by the respondent assessee for the Surat Municipal Corporation are for non commercial purpose. 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. It can be seen from the impugned order-in-appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Authorized Representative pointed out that the activity done by them is squarely covered under the definition of ECIS. He pointed out that the definition of ECIS at the material time reads as follows: Erection, Commissioning or Installation means any service provided by a commissioning and installation agency, in relation to,- (1) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre- fabricated or otherwise or (ii) installation of- (a) electrical and electronic devices, including wirings or fittings therefor, or (b) plumbing, drain laying or other installations for transport of fluids; or (c) heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work: or (d) thermal insulation, sound insulation, fire proofing or water proofing; or (e) lift and escalator, fire escape staircases or travelators; or (f) such other similar services, He pointed out that the said category specifically covers plumbing, drain laying or other installations for transport of fluids. 5. We have considered rival submissions, we find that the primary defense of the appellant is that the activity under taken by them does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' reading of the expressions contained in the relevant entry, namely, 'erection, commissioning or installation'. We find it elementary that 'erection' connotes construction or building of a structure and laying of pipeline does not involve erection. We find no ambiguity in the expression installation. It applies to machinery already made which are formally made ready to operate at the site. Installation implies setting up the machinery ready for use, like giving power connections or installing driver software in the case of a machine ran with the aid computer software. Commissioning involves the operationalisation of the machinery after which it starts functioning regularly. In laying of long distance pipeline, earth is dug and pipes laid and jointed, and the pipes pass through sumps with boosters at intervals, if necessary. This activity will not involve erection. 8.2 As rightly argued by IHPL, the CBEC Circular No. 62/11/2003-S.T., dated 21-8-2003, inter alia, clarified the levy to the same effect as follows: 1.2 As commonly understood, the activity of installation means the act of putting an equipment, machinery or plant into its place and making it ready for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Larger Bench of tribunal in case of LANCO INFRATECH LTD. 2015 (38) S.T.R.709 (Tri.-LB). Hon'ble High Court observed as follows: 10. On the question as to what happens if the case is covered by Section 65(25b), a larger Bench of the Customs, Excise and Service Tax has already held in Lanco Infratech Ltd. v. Commissioner of Customs, Central Excise and Service Tax, Hyderabad [2015 TIOL-768- CESTAT-BANG-LB = 2015 (38) S.T.R. 709 (Tri. - Bang)] as follows: Considered in the light of the precedents referred to herein above; the definitions of ECIS and CICS; the Board clarification dated 7-1-2010; the Dictionary meanings ascribed to the word conduit ; and provisions of Section 65A(2)(a) and (b), we conclude that construction of a pipeline/conduit for transmission of water/sewerage and involving associated works like digging of the earth, supporting pipeline/conduit, construction of pumping stations together with associated machinery and other construction works, including for transmission of water in lift irrigation projects, cannot be classified under ECIS. These services are only classifiable as CICS. Where the pipeline/conduit laying is executed for Government or Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pipe Systems Pvt. Ltd. It has been argued by the appellant that the specific sub-clause of the Business Auxiliary Service under which tax is sought to be demanded has not been identified. He placed reliance on the decision of tribunal in case of SWAPNIL ASNODKAR (supra). We find that in Para 6.1 of the Show Cause Notice in the said para after identifying the amount received as the sales commission following has been expressly stated. It also reveals from the details submitted by M/s. Electrosteel Castings Ltd., Ahmedabad that t56hey have given work to M/s. Shree Hindustan to act as their sales commissioner agent for pipes. The said work of commissioner agent fails in the Business Auxiliary Services. M/s. Electrosteel Castings Ltd., Ahmedabad has paid 5,29,110/- to M/s. Shree Hindustan against the services provided to them which includes amount of Service Tax. 6.1. Similar, assertions have been made in case of all such three clients of the appellant. We find that specific clarity of charge has been made to levy Service Tax under the category of Business Auxiliary Service and no prejudice is caused to the appellant on account of this the demand under the head of Business Auxiliary S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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