Service-tax exemption for subcontractors on public works extends to indirect provision of covered services under binding Tribunal precedent

Notification No. 25/2012-ST is described as extending exemption to services for specified public works, including water supply and sewerage-related projects, where the services are ultimately rendered to the Government or a local authority. The text further states that this benefit can extend to a subcontractor who indirectly provides the covered services for such projects. It also records that earlier Tribunal rulings on the same point remain binding while they continue to operate, and their precedential force is not diluted merely because the Revenue disagrees with them in other matters. On that basis, the Commissioner (Appeals) followed those rulings and exemption relief was sustained.

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Issues: Whether a subcontractor providing services for works covered by Notification No. 25/2012-ST dated 20.06.2012 is entitled to the exemption available for services provided to the Government or a local authority, and whether a binding decision of the Tribunal can be disregarded merely because the Revenue did not accept it in other cases.

Analysis: The exemption under Notification No. 25/2012-ST was construed to cover services rendered for specified public works such as water supply and sewerage-related works. The decisive fact was that the respondent, though a subcontractor, had indirectly provided the covered services for projects ultimately rendered to the Government or local authorities. The earlier decisions of the Tribunal on the same question were treated as binding and operative so long as they held the field, and their precedential value was not diminished by the Revenue's non-acceptance in other matters. The Commissioner (Appeals) was therefore justified in following those decisions.

Conclusion: The subcontractor was entitled to the benefit of the exemption notification, and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected, and the order granting exemption relief to the respondent was sustained.

Ratio Decidendi: A Tribunal decision on a point of law remains binding unless set aside, and the benefit of a service-tax exemption notification covering services to Government or local authorities can extend to a subcontractor who indirectly provides the specified services.

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