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of <h1>Pipeline laying for drinking water supply projects excluded from service tax under Section 65(105)(zzzza) works contract definition</h1> <h3>M/s. Indian Hume Pipe Co. Limited Versus The Commissioner of GST & Central Excise</h3> M/s. Indian Hume Pipe Co. Limited Versus The Commissioner of GST & Central Excise - TMI Issues Involved:1. Classification of the activity under 'Works Contracts Services.'2. Exemption from service tax for non-commercial or non-industrial purposes.3. Status of the appellant as a sub-contractor.4. Precedents and relevant judgments.Summary:1. Classification of the activity under 'Works Contracts Services':The appellant engaged in laying pipelines for the Tamilnadu Water and Drainage Board (TWAD) was classified under 'Works Contracts Services' (WCS) as per sub-clause (zzzza) of clause (105) of Section 65 of the Finance Act, 1994. The department issued a show cause notice for non-payment of service tax on the consideration received for such contracts, covering the period from 04.06.2009 to 12.01.2010.2. Exemption from service tax for non-commercial or non-industrial purposes:The appellant argued that the activity of laying pipelines falls under sub-clause (b) of the WCS definition, which is exempt from service tax as it is not for commercial or industrial purposes but for drinking water supply by TWAD. The Tribunal agreed, referencing the Larger Bench decision in Lanco Infratech Ltd. Vs CC, CE & ST, Hyderabad, which held that laying pipelines for government projects is exempt from service tax.3. Status of the appellant as a sub-contractor:The department contended that the appellant was a sub-contractor and thus not entitled to exemption. However, the Tribunal found that the appellant was directly engaged by TWAD, a government entity, and not as a sub-contractor. This conclusion was supported by a letter dated 17.09.2008 from TWAD to the appellant, confirming the direct contract.4. Precedents and relevant judgments:The Tribunal referenced several judgments, including:- Lanco Infratech Ltd. Vs CC, CE & ST, Hyderabad, which established that laying pipelines for government projects is non-commercial and exempt from service tax.- Progressive Constructions Ltd. Vs CST Hyderabad and Shriram EPC Ltd. Vs CGST & Central Excise, Chennai, which reinforced the exemption for similar activities.Conclusion:The Tribunal concluded that the demand for service tax could not be sustained, setting aside the impugned order and allowing the appeal with consequential reliefs. The decision was based on the classification of the activity, exemption criteria, and relevant judicial precedents.
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