9911796707
TMI Blog2025 (1) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 15th September 2009 was issued on a reference being received by the Board with regard to the issues as to what would be the correct meaning of the commercial or industrial construction services as per Section 65 (25b) of the Finance Act, 1994. It was clarified by the Board that the essence of the definition is that the commercial or industrial construction service is chargeable to service tax if it is used, occupied or engaged either wholly or primarily for the furtherance of commerce or industry. As the canal system built by the Government or under Government project is not falling under commercial activity, the canal system built by the Government will not be chargeable to service tax. This Circular was taken note of by the Tribunal in yet another Circular dated 24.5.2010. When the factual position is not in dispute namely, that the assessee has performed the work for the Kerala Water Authority, which is undoubtedly a Government/Government undertaking and the project was aimed at providing civic amenities to the public at large, it can never be termed to be a commercial or an industrial project. Furthermore, the revenue does not dispute the fact that the Kerala Water Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority as well as the first Appellate Authority - Appeal dismissed. - HON BLE THE CHIEF JUSTICE T.S. SIVAGNANAM AND HON BLE MR. JUSTICE HIRANMAY BHATTACHARYYA Appearance: For the Appellant: Mr. Uday Sankar Bhattacharyya, Adv. Mr. Tapan Bhanja, Adv. For the respondent: Mr. Rahul Dhanuka, Adv. Mr. Niraj Baheti, Adv. Ms. Sreeja Chakraborty, Adv. T.S. SIVAGNANAM, C.J. : 1. These appeals filed by the revenue under Section 35G of the Central Excise Act, 1944 (the Act) are directed against the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, Calcutta, (the Tribunal) in Service Tax Appeal No. 75419 of 2014 and 75420 of 2014 dated 9th August, 2024. The revenue has raised the following substantial questions of law for consideration:- (i) Whether the impugned order dated 09.08.2024 passed by the Learned Tribunal is in contrary to the Provisions of Section 11B of Central Excise Act, 1944? (ii) Whether the issue of unjust enrichment is squarely applicable in the case of the respondent ? (iii) Whether the order dated 09.08.2024 passed by the Learned Tribunal on the issue No. (c) is against the decisions of the Hon ble Supreme Court as well as the Hon ble High Courts? (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under Section 11B of the Central Excise Act covering the period from 01.06.2007 to 30.09.2010 and from 01.01.2011 to 31.10.2011. 7. The adjudicating authority by order dated 18.10.2012 rejected such application, firstly on the ground that supporting documents for exemption of service tax for work awarded by the Kerala Water Authority was not provided by the assessee. 8. Further it was alleged that in the bid document which has been mentioned that all duties, taxes and other levies payable by the director under the contract shall be included in the rates and prices and the total bid price submitted by the bidder should include the same. Thirdly, there was some discrepancy pointed out in the R.A. Bill value etc. Once again there was an allegation that the assessee has not submitted supportive documents whether Kerala Water Supply project being established solely in the interest of the public service and not for the purpose of profit. Those were some of the allegations in the show-cause notice for which the assessee submitted their reply along with the supportive documents. The adjudicating authority by order dated 18th October, 2012 rejected the explanation offered and confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in yet another Circular dated 24.5.2010. The Central Board discussed about the applicability of service tax on laying of cables under or alongside roads and similar activities and clarification was issued. In the said circular, it was clarified that even in case of works contract if the nature of the activities is such that they are excluded from the purview of commercial or industrial construction services, or erection, commissioning or installation services, then they would generally remain excluded from this taxable service as well. These circulars are sufficient indication to hold that when the Government projects are being implemented, the service tax liability cannot be fastened. This very issue was considered by the larger Bench of the Tribunal in the case of Lanco Infratech Ltd. v. CC, CE ST, Hyderabad, reported in 2015 (38) STR 709 (Tri.-LB). Five questions were framed by the larger Bench of the Tribunal of which two questions would be relevant for the cases on hand, which are quoted hereinbelow: (A) Whether laying of pipelines for lift irrigation systems, transmission and distribution of drinking water or sewerage, undertaken for Government/Government undertakings should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is a descriptive and ex abundant cautela drafting methodology. In the light of the decision in Alstom Projects India Ltd., fortified by the Special Bench decision (dated 19-3-2015) in Larsen Toubro Ltd. reference, a turnkey/EPC contract is taxable prior to 1-6-2007 as well. On and since 1-6-2007, turnkey/EPC contracts must be classified on the basis of the essential character of the service provided thereby, with the aid of classification guidelines set out in Section 65A (2) of the Act. Consequently, a turnkey/EPC contract must be classified under any of the clauses (a) to (d), Explanation (ii), Section 65 (105) (zzzza) of the Act. The bundled bouquet of services provided as turnkey/EPC contract, classifiable as Commercial or Industrial Construction Service (CICS) prior to 1-6-2007, would be classified under clauses (b), Explanation (ii), Section 65 (105) (zzzza) on and from 1-6-2007 and would not be exigible to Service Tax if the rendition of service thereby is primarily for non-commercial, non-industrial purpose, in view of the exclusionary clause in clause (b) of the definition of WCS. This is the only possible and harmonious interpretation possible of the several clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala Water Authority, will not be a taxable service under Works Contract Services. Having held so, the question would be as to whether the other issues regarding the applicability of provisions of Section 11B of the Central Excise Act, 1944, is a case of unjust enrichment, has to be considered. 18. Under normal circumstances, the question need not be considered because it has been held by us that the activity undertaken by the assessee is not a taxable service under the Works Contract Service. However, since Mr. Bhattacharyya, the learned senior standing Counsel appearing for the department had vehemently contested these issues as well, we are constrained to record our opinion on those issues. Firstly, the question would be whether the provision of Section 11B of the Act would stand attracted. Mr. Bhattacharyya places reliance on the decision of the Division Bench of the High Court of Karnataka in the case of M.C.I. Leasing (P) Ltd. v. Commissioner of Central Excise, Mysore, reported in 2014 (33) STR 497 (Kar.). In fact, the said decision would support the case of the assessee since it has been held in the decision that if the amount paid is not within the Act then the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
