Tribunal grants waiver of service tax dues for Gujarat Water Supply project

The Tribunal granted a waiver of the entire service tax dues demanded in the impugned order, allowing the stay application without recovery of the amount even after 180 days from the order date. The Tribunal found that laying pipelines for the Gujarat Water Supply and Sewerage Board does not qualify as 'commercial or industrial construction services' based on the primary function of the Board as a service sector establishment. The waiver of pre-deposit of duty, penalty, and interest amounts was allowed, and recovery of said amounts was stayed pending the disposal of the appeals.

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Issues involved: Service tax liability on the appellant u/s 'Commercial or Industrial Construction Services'.

The judgment pertains to three stay petitions seeking waiver of pre-deposit of amounts due to service tax demand on the grounds of not paying service tax for services provided under 'Commercial or Industrial Construction Services'. The appellant argued that laying pipelines for the Gujarat Water Supply and Sewerage Board (GWSSB) does not fall under this category, citing a previous case where a similar activity was granted an unconditional stay. The respondent, however, contended that the appellants are indeed liable to pay service tax based on evidence and facts considered by the Commissioner.

Upon careful consideration of submissions from both sides, the Tribunal examined the primary function of GWSSB as per Section 14 of the Act, which includes preparing and executing schemes for water supply and sewerage. It was noted that the sale of water is not the primary function of GWSSB, as confirmed by a letter from the Member Secretary. The letter highlighted that GWSSB primarily executes water supply and sewerage works for rural and urban communities at subsidized rates, emphasizing its role as a service sector establishment rather than a commercial organization selling drinking water. In light of these findings, the Tribunal concluded that laying pipelines for GWSSB does not qualify as 'commercial or industrial construction services'. Citing a previous case with a similar outcome, the Tribunal granted a waiver of the entire dues demanded in the impugned order, allowing the stay application without recovery of the amount even after 180 days from the order date. The Tribunal also permitted an early hearing of the appeal due to the significant revenue involved.

In line with the decision on a similar issue, the Tribunal found that the appellant had established a prima facie case for the waiver of pre-deposit of duty, penalty, and interest amounts. Consequently, the applications for waiver were allowed, and the recovery of said amounts was stayed pending the disposal of the appeals.

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