Sub-contractor exemption for Government irrigation works cannot be denied where the project falls within the notification's scope.

The exemption under Notification No. 25/2012-ST covered taxable services relating to construction and allied works of canals and irrigation projects for Government entities, and it did not exclude work executed through a sub-contractor. Because the services formed part of a Government-awarded irrigation project and the notification contained no bar against subcontracting, the benefit could not be denied merely on that ground. The service tax demand was therefore not sustainable on merits.

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Issues: Whether the benefit of Notification No. 25/2012-ST dated 20.06.2012 was available to a sub-contractor engaged in canal work for a Government irrigation project, and whether service tax demand could be sustained merely because the services were provided through the main contractor.

Analysis: The exemption notification covered taxable services provided to the Government, a local authority, or a governmental authority in relation to construction and allied works of canals and irrigation projects. No condition in the notification excluded sub-contracting or denied exemption where the work was executed through a sub-contractor. The services rendered by the assessee formed part of the Government-awarded irrigation contract, and the Board's education guide also supported exemption in such a situation. On these facts, the demand could not be sustained on merits.

Conclusion: The exemption was available to the assessee and the service tax demand was not sustainable.

Ratio Decidendi: Where exempt works are ultimately rendered for a Government project covered by an exemption notification, the benefit cannot be denied solely because the services were provided through a sub-contractor.

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