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TMI Blog2025 (2) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... non-commercial nature of the services.
Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ricator are entirely different, diverse and distinguishable. In the case of M/s. Indian Hume Pipe Co. Ltd (Supra), there was a classification dispute of service provided by the assessee whereas in the case of M/s. Nagarjuna Construction (Supra), the issue before the Hon'ble Tribunal was whether activities of M/s Gujarat Water Supply and Sewerage Board (GWSSB) of purchasing and selling water, falls within the meaning of "Commerce" or a "Commercial activity" as defined in "Commercial and Industrial Construction Service", under Section 65(25)(b) of the Finance Act, 1994. The Hon'ble Tribunal held that GWSSB primarily executes water supply and sewerage work for the benefit of both the rural and urban communities, excluding the Municipal Corporations and the charges collected by them were nominal charges which was imposed by the State Government with the view to create a sense of responsibility and awareness towards the services amongst the people for its economic views. Contrary to the above, the Surat Municipal Corporation (SMC) is a local self-Government body which sells the water to huge number of commercial establishments and Industrial manufacturers at commercial rate. Apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking GIDC for providing water supply and so it is 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. 2.3 It has been prayed by the Authorised Representative that the Order-in-Appeal dated 02.08.2018 passed by the Commissioner (Appeals) may be quashed and set aside. 3. The Learned Counsel for the respondent submitted that the impugned order dated 02.08.2018, has been passed after appreciating the facts of the case and in accordance with law. Therefore, no interference is required in the impugned order-in-appeal dated 02.08.2018. 4. We have heard Learned Authorized Representative and the Learned Counsel for the respondent and perused the record. 4.1 The Learned Authorized Representative has challenged the impugned order mainly on the ground that Commissioner (Appeals) has wrongly placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning and Installation provided by the appellant was utilized consolidatedly by the residential, commercial and industrial concerns and being the common pipeline for all type of customers, it is not possible to bifurcate proportionate uses of water supply or drainage among residential, commercial and industrial customers and therefore, the exemption under Entry No. 12(e) read with 25(a) of Notification No. 25/2012-ST dated 20.06.2012, is not available to them. Where ever services have been provided to non-government bodies, they have discharged their Service Tax liability. 4.3 In the impugned order, the Commissioner has also stated that the question involved here is "whether Surat Municipal Corporation (SMC) is a government, a local authority or a governmental authority, and consequently, whether the above work undertaken for SMC is exempted." M/s. Hindustan Fabricators contended that in the said Notification clear exemption is available to them. Further, CBEC has clarified the position vide Circular No. 199/09/2016-Service Tax dated 22.08.2016, that in respect of services provided to the Government, a local authority or a governmental authority with regard to water supply, the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, a local authority or a governmental authority and will include the activity of construction of tube wells. 4.7 In the impugned Judgment, reliance has been placed upon the case of Indian Hume Pipe Co. Ltd. v. CCE [2008] 16 STT 136 (Chennai - CESTAT), in which Tribunal held that in terms of "'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." 4.8 In the impugned order, reliance has also been placed upon the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SMC, are exempt from the service tax. The adjudicating authority has misinterpreted the issue by finding that the said services are used for commercial purpose whereas the SMC has performed his statutory duty, by way of providing the system of transmission of fluid for public. Therefore, the said services are exempt from service tax. 5.8 Further, I rely upon the decision of Hon'ble High Court of Gujarat in the case of the Commissioner of CGST and Central Excise, Surat vs M/s. BMS Projects Pvt. Ltd. Vide order dated 21 September 2017[2017(9) TMI 1386-Gujarat High ourt] 1) wherein it was held that "service provided by the respondent in laying down long distance pipeline for transfer of drinking water in the state of Gujarat pursuant to a contract awarded by Gujarat Water Supply and Sewerage Board-levy of tax- Held that- GWSSB discharged an important duty and responsibility of providing drinking water to the people, industries etc. The Board was constituted mainly to supply drinking water and maintenance of Sewerage System. The usage charges recovered by the Board from Gram Panchayat, Nagar Palika and Nagar Panchayat are at highly subsidized rate and therefore, cannot be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstituted mainly to supply drinking water and maintenance of Sewerage System. The usage charges recovered by the Board from Gram Panchayat, Nagar Palika and Nagar Panchayat are at highly subsidized rate 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. 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 industry at commercial rates-levy of tax set aside" In view of the above decision of the Gujarat High Court and as well as by perusal of the mega Notification No. 25/2012 dated 20.06.2012. We have no doubt that the activity undertaken by the respondent assessee falls under the category of exempted services. 4.2 We also take note of the fact that for earlier period in assessee's own case in this tribunal vide its final order no. A/10337-10338/2020 dated 29.01.2020 reported under 2020 (2) TMI 110-CESTAT Ahmedabad has already decided the matter in favour of the respondent assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot;As regard the demand of service tax on referral fees received by the appellant from HDFC Chubb insurance company, we find that the service is in connection with business of insurance of HDFC Chubb. In terms of Sub Section 65 of Finance Act, 1994, the service provided by the appellant falls under definition of Insurance Auxiliary Services whereas the Revenue has raised the demand under wrong head. On this ground the demand of service tax under Business Auxiliary Services does not sustain. As per our above discussion, the impugned order is set aside and appeal is allowed." 5.1 The next argument of the appellant is that the service provided by them is not covered under ECIS as held by tribunal in case of INDIAN HUME PIPE CO. LTD. (supra) affirmed by the Hon'ble High Court of Madras. In Para 8, 8.1 & 8.2 of the decision of tribunal in case of INDIAN HUME PIPE CO. LTD. following has been observed: "8. We have considered the rival arguments. The dispute involves the meaning of the expression and legislative intent behind scope of the levy on erection, commissioning or installation. The impugned order found that up to 16-6-95, the assessee had rendered the taxable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry "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 16-6-05 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 Id. Consultant for the department has tried to defend the interpretation of the Commissioner of the expression plant. The Commissioner's interpretation of a plant would cover a long distance pipeline. We find it difficult to accept the above reading of the word plant in the context it is used. It is an inappropriate selection of the various meanings of this simple word. Plant in popular usage means a cluster of buildings or a building in which machinery are installed usua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly pointed out by the Tribunal, the assessee was entrusted with the task of laying a long distance pipeline to enable the Tamil Nadu Water Supply and Drainage Board to supply water. It was an activity in public interest, to take care of the civic amenities liable to be provided by the State. Therefore, the Tribunal was right in holding in favour of the assessee. Hence, the question of law is answered in favour of the assessee." 5.3 In view of categorical findings of Larger Bench as well as Hon'ble High Court of Madras cited above we respectfully hold that the activities under taken by the appellant cannot be classified under ECIS. 5.4. The other arguments of revenue regarding classification of services under Works Contract Service or Commercial or Industrial Construction Service become irrelevant as no demand under the said head has been raised by revenue. No charge for classification of the serviced provided by the appellant under the head of Works Contract or Commercial or Industrial Construction Service has been made against the appellant. In these circumstances we are unable to uphold the demand raised against the appellant in respect of activities relating to layi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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