2023 (4) TMI 924 - AT - Service Tax

Underground cable installation not taxable service per tribunal; Exemption granted under notification.

The tribunal held that laying underground cables with three-phase earthing box and accessories does not constitute Erection, Installation, and ... Classification of Service Tax - Erection, installation and Commissioning service - laying of underground cable providing three phase earthing box and providing connected accessories - eligibility for concessional exemption in terms of notification no. 1/2006-ST dated 01.03.2006 - HELD THAT:- This tribunal considering the identical facts held in ROYAL ELECTRICALS VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [2017 (11) TMI 298 - CESTAT MUMBAI] that laying of cable, shifting of cable for the purpose of widening, renovation of roads, etc is not taxable. This identical service of laying of cable was also considered by this tribunal in COMMISSIONER OF C. EX. & S.T., JAIPUR-II VERSUS RISHABH TELELINKS [2017 (4) TMI 647 - CESTAT NEW DELHI] wherein, the tribunal relying on the CBEC Circular No. 123/05/2010- ST dated 24.05.2010 held that the laying of cable is not liable to service tax, in the said case the revenue’s appeal was dismissed. The activity of the appellant that is pre-dominantly laying of underground cable is not eligible to service tax - Appeal allowed. Issues:The judgment involves determining whether laying underground cable with three-phase earthing box and connected accessories falls under the service category of Erection, Installation, and Commissioning service, and whether the appellant is eligible for concessional exemption under notification no. 1/2006-ST dated 01.03.2006.Issue 1: Classification of ServiceThe appellant argued that laying underground cable does not constitute Erection, Installation, and Commissioning service, citing precedents such as Commissioner of C.Ex., & S.T. Jaipur-II Vs. Rishabh Telelinks. The tribunal referred to the case of Royal Electricals, where it was held that laying cables for purposes like widening or renovating roads is not taxable. The tribunal also cited a Board Circular stating that certain activities, including laying electric cables between grids/sub-stations/transformer stations, are not taxable. Relying on consistent precedents, the tribunal concluded that the activity of predominantly laying underground cable is not subject to service tax, setting aside the demand.Issue 2: Exemption EligibilityThe revenue contended that since the appellant did not provide plant, machinery, equipment during the cable laying, they are not eligible for exemption under notification no. 1/2006-ST dated 01.03.2006. The tribunal, after considering arguments from both sides and reviewing relevant records, found that the laying of underground cable, earthing box, and accessories did not fall under taxable services. Therefore, the demand for service tax was deemed unsustainable, and the appeal was allowed, setting aside the demand.Separate Judgment:No separate judgment was delivered by the judges in this case.