Tribunal grants waiver and stay on pre-deposit, pending appeal.

The Tribunal ruled in favor of the appellant, granting a waiver of the pre-deposit of the amounts in question and staying the recovery pending the appeal's disposal.

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Issues Involved:
Service tax liability on services rendered for turnkey projects executed for the Govt. of Andhra Pradesh.

Analysis:
1. The issue in this case revolves around the service tax liability on the services provided by the appellant for turnkey projects executed for the Govt. of Andhra Pradesh. The Revenue claims that these activities fall under the category of works contract, specifically under sub-clause (e) of turnkey projects. The appellant argues that they should be exempt from tax liability as the projects are not of a commercial nature but are related to the irrigation system, such as construction of reservoirs, canals, etc.

2. The appellant contends that they fall under the category of 'Commercial or Industrial Construction services' under Section 65(25b) of the Finance Act, 1994, and should be exempt from service tax. They rely on a Revenue circular stating that only works intended for commerce or industry are taxable, excluding projects related to roads, airports, railways, etc. The appellant asserts that their projects for the Govt. of Andhra Pradesh are non-commercial in nature, thus not liable for service tax.

3. On the other hand, the Revenue argues that the projects undertaken by the appellant directly fall under the category of turnkey projects and should be taxed under works contract services. They point to the title of the agreement between the appellant and the Govt. of Andhra Pradesh as evidence of it being a turnkey project, making it taxable under works contract services.

4. The Tribunal analyzed the definition of 'works contract' services and found that the appellant's services for the irrigation projects do not fall under the category intended for commerce or industry. Referring to a Board circular, the Tribunal noted that activities related to the welfare of citizens, such as construction of dams, are exempt from service tax even if done through Engineering Procurement and Construction (EPC) mode.

5. Considering the arguments presented, the Tribunal found that the appellant has made a case for waiver of the pre-deposit of the amounts involved. Therefore, the Tribunal allowed the application for waiver and stayed the recovery of the amounts until the appeal is disposed of.

In conclusion, the Tribunal ruled in favor of the appellant, granting a waiver of the pre-deposit of the amounts in question and staying the recovery pending the appeal's disposal.

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