2026 (2) TMI 397 - AT - Service Tax

Laying of telecom cables alongside roads found outside taxable service; works contract classification leads to appeal allowed.

Laying of telecom cables under or alongside roads falls outside taxable service under the service-tax definition, following Circular No.123/5/2010-TRU ... Works contract service - Laying of cables under or alongside roads not taxable - Commercial or industrial construction services - Applicability of Circular No.123/5/2010-TRU - Whether laying down cables by the appellant alongside the road for various telecom service providers, namely, BSNL, Vodafone, Bharti Airtel, Idea etc. would be leviable to service tax.- HELD THAT:- We find that in the Circular No.123/5/2010-TRU dated 24.05.2010 it is clarified that laying cables under or alongside roads would not fall within the scope of taxable service under Section 65 (105) of Finance Act, 1994. We find that the services rendered by the appellants are classifiable as works contract service and they have produced sufficient evidence that the services are in the nature of composite contract which involves supply of materials and also labour, hence, squarely covered by the judgment of Hon’ble Supreme court in the case of Commissioner of Central Excise & Customs v. M/s. Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT]. Thus, we do not find merit in the impugned order, consequently, the same is set aside and the appeal is allowed with consequential relief, if any, as per law. Issues: Whether laying of cables under or alongside roads by the service provider for telecom operators is leviable to service tax.Analysis: The issue was examined with reference to the statutory scope of taxable services under Section 65(105) of the Finance Act, 1994 and the administrative clarification issued by the Board in Circular No.123/5/2010-TRU dated 24.05.2010 which specifies the tax status of activities such as laying of cables under or alongside roads. The analysis applied the legal characterisation of the service rendered - whether it falls within 'commercial or industrial construction service', 'erection, commissioning or installation services', or remains outside the scope of taxable services - and considered classification of the contracts as works contracts or composite contracts involving supply of materials and labour. Prior Tribunal decisions applying the Board circular to laying of optical fibre and similar activities were followed.Conclusion: Laying of cables under or alongside roads by the service provider is not a taxable service under Section 65(105) of the Finance Act, 1994; the impugned order is set aside and the appeal is allowed in favour of the assessee.