Revenue's Appeal Dismissed: Water Supply Contracts for Govt Projects Not Commercial

The appeal by the Revenue against an Order-in-Original regarding service tax on water supply contracts was dismissed by the Tribunal. The Tribunal upheld the impugned order, emphasizing that water supply projects for government projects are essential civic amenities and not commercial activities. It was concluded that no commercial activity was involved as the water was not sold to anyone, leading to the dismissal of the appeal based on the lack of commercial nature in the project.

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Issues:
Appeal against Order-in-Original regarding service tax on water supply contracts.

Analysis:
The appeal was filed by the Revenue against an Order-in-Original dated 28.11.2008 passed by the Commissioner of Service Tax, Kolkata, concerning the period from 16.06.2005 to 31.03.2007. The respondent-assessee, engaged in executing turnkey contracts for water supply to a government project, was charged service tax by the Department. However, the Commissioner allowed the claim of the respondent, leading to the appeal. The Tribunal referred to a similar case involving GWSSB and emphasized that water supply projects are essential civic amenities, not commercial activities. The Tribunal concluded that no commercial activity was involved as the water was not sold to anyone, and upheld the impugned order based on this reasoning. The appeal by the Department was dismissed, citing the earlier decision and the lack of commercial nature in the project.

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