Appellate Tribunal rules in favor of appellant, exempts service tax on government pipeline construction

The Appellate Tribunal CESTAT NEW DELHI allowed the appeal, setting aside the Order-in-Original dated 9.1.2014 that imposed service tax on providing pipelines for the Government of Rajasthan. Relying on the precedent set in the Lanco Infratech Ltd. case, the Tribunal determined that construction of pipelines for government purposes, even under turnkey/EPC contractual mode, is not subject to service tax. The appellant's appeal was allowed, providing relief from the service tax liability on providing pipelines for government use.

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Issues:
- Appeal against Order-in-Original dated 9.1.2014 regarding service tax on providing pipelines for the Government of Rajasthan.
- Interpretation of whether construction of pipelines for government purposes falls under service tax ambit.
- Application of Tribunal's decision in Lanco Infratech Ltd. case on non-commercial, non-industrial purposes.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI challenged the Order-in-Original dated 9.1.2014 concerning the imposition of service tax on providing pipelines for the Government of Rajasthan. During the period under consideration, the appellant was engaged in this activity, which the department brought under the service tax net. The appellant contended that the activity should not be subject to service tax. The Tribunal heard arguments from both sides, where the appellant was represented by Shri S. Jaikumar, and the respondent by Shri Sanjay Jain, DR.

The Tribunal referred to a previous case, Lanco Infratech Ltd. Vs. CCE, where it was established that construction of canals/pipelines/conduits for government purposes, even under turnkey/EPC contractual mode, would not be subject to service tax. This determination was based on the exclusion clause in the relevant section. Following the precedent set in the Lanco Infratech Ltd. case, the Tribunal found no justification to uphold the impugned order and consequently set it aside. As a result, the appeal filed by the appellant was allowed, providing relief in the matter of service tax on providing pipelines for government use. The decision was dictated and pronounced in open court by the Tribunal.

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