2023 (12) TMI 124 - AT - Service Tax

Tribunal Rules Service Tax on Sewerage System Construction Unjustified, Overturns Penalties in Favor of Appellant.

The Tribunal determined that the demand for Service Tax on services related to the construction of a sewerage system and allied works was unsustainable. ... Classification of services - services of construction of sewerage system and allied works including laying of pipes in Indore city under JNNURM project in terms of the work awarded by Indore Municipal Corporation (IMC) - classifiable as erection, commissioning and installation service or commercial or industrial construction as per the definition contained in Works Contract Services? - HELD THAT:- The issue is no longer res integra as an identical issue has been decided in favour of the Appellant by the Tribunal’s Chennai Bench in the case of M/s Shriram EPC Ltd v. Commissioner of GST and Central Excise Chennai [2018 (11) TMI 1083 - CESTAT CHENNAI]. The same view has been taken by CESTAT Allahabad Bench in the case of Jyothi Buildtech (P) Ltd Vs Commissioner of C.Ex, Cus and S.Tax, Noida [2017 (3) TMI 1100 - CESTAT ALLAHABAD]. In this case the Tribunal has relied upon the decision of Larger Bench in the case of Lanco Infratech Ltd. [2015 (5) TMI 37 - CESTAT BANGALORE (LB)] and it was held that such works executed by the appellant in the nature of sewerage works, laying of pipe and for water supply falling under Explanation (ii)(b) fall under the definition of “works contract service” and were also exempted under the classification commercial and industrial construction service prior to 1-6-2007, as explained by the Larger Bench. It is observed that the facts and circumstances of the present case are identical to the decisions cited above. Accordingly, by following the ratio of the decisions cited above, it is held that the demand confirmed in the impugned order is not sustainable. Since, the demand itself is not sustainable, the question of demanding interest or imposing penalty does not arise. The impugned order set aside - appeal allowed. Issues involved:The classification of services rendered for construction of sewerage system and allied works under Works Contract Services for Service Tax liability.Summary:The appeal was filed against the Order-in-Original confirming a demand for Service Tax on services rendered for construction of sewerage system and allied works. The Commissioner classified the services under Works Contract Services, imposing penalties. The Appellant argued that the services were for a non-commercial purpose. Citing precedents, the Appellant sought to set aside the demand.Key Points:- The Appellant undertook services for construction of sewerage system for Indore Municipal Corporation.- The Commissioner classified the services under Works Contract Services, imposing penalties.- The Appellant argued that the services were not for commercial purpose.- Precedents were cited where similar issues were decided in favor of the Appellant.- The Tribunal observed that the issue was settled in favor of the Appellant in previous cases.- Citing relevant decisions, the Tribunal held that the demand was not sustainable.- The Tribunal set aside the impugned order and allowed the appeal.Decision:The Tribunal held that the demand for Service Tax on services rendered for construction of sewerage system and allied works was not sustainable, following precedents where similar issues were decided in favor of the Appellant. The impugned order was set aside, and the appeal was allowed.