2026 (1) TMI 1076 - AT - Service Tax

Taxability of Dredging Services in Buckingham Canal: Coordinate Bench Rule Leads to Non-Exigibility of Service Tax

Activities undertaken in relation to Buckingham Canal were examined for classification as dredging services; the tribunal applied a coordinate bench ... Taxability of services - Dredging service - definition of 'dredging' - service tax liability - Requirement of dredging apparatus - Binding effect of coordinate bench precedent - Whether the activity with respect to the work undertaken by the appellant pertaining to Buckingham Canal amounts to dredging service is the only issue that arises for our consideration. - HELD THAT:- We find that a coordinate bench of this tribunal has earlier considered the issue regarding activities, similar to that which have been undertaken by the appellant in the present appeal, which were alleged to be dredging services carried out in Buckingham Canal, in the decision in Ramalingam Construction Company (P) Ltd versus CCE & ST, [2018 (7) TMI 620 - CESTAT CHENNAI] We find that this tribunal, after extensively dwelling on the same, had decided the matter in favour of the appellant therein. We are therefore bound by the aforesaid decision of the coordinate bench and respectfully following the same, we hold that the activities undertaken by the appellant pertaining to Buckingham Canal cannot be considered to be “Dredging Services” so as to be exigible to tax under the Finance Act, 1994. Therefore, the impugned Order in Appeal cannot sustain and is liable to be set aside. Ordered accordingly. Issues: Whether the activities undertaken by the appellant in relation to Buckingham Canal constitute 'dredging service' as defined in Section 65(36a) of the Finance Act, 1994 and are therefore taxable.Analysis: The statutory definition of 'dredging' in Section 65(36a) requires (i) removal of material such as silt, sediments, rocks, sand, refuse, debris, plant or animal matter and (ii) that such removal be carried out in the course of excavating, cleaning, deepening, widening or lengthening of a river, port, harbour, backwater or estuary. The tribunal considered dictionary meanings and etymology but confined interpretation to the statutory text, noting that the statute limits dredging to the listed water bodies. The activities in question involved widening, deepening, construction of flood protection walls, inlet arrangements and packing bottoms/sides with concrete in the Buckingham Canal and connected channels, with no use of boats, barges or dredging apparatus recorded. A coordinate bench decision (Ramalingam Construction Company) addressing identical activities on Buckingham Canal concluded such works do not fall within Section 65(36a). No stay of that decision was shown; the coordinate bench precedent was followed.Conclusion: The activities undertaken by the appellant do not constitute 'dredging service' under Section 65(36a) of the Finance Act, 1994 and therefore are not exigible to service tax; the appeal is allowed in favour of the assessee.