Irrigation works exemption covers canal soil work and culvert construction, invalidating service tax demand and related penalties.

Works contract services involving canal soil work and culvert construction connected with irrigation works fall within the service tax exemption for construction-related services provided to Government in relation to canals, dams or other irrigation works under Serial No. 12(d) of Notification No. 25/2012-ST. Departmental certificates and tax records established the irrigation-related nature of the services. Consequently, the services were exempt from service tax, and the related tax demand, interest and penalties were unsustainable.

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Issues: Whether the works contract services supplied for canal soil work and construction of a culvert were exempt from service tax.

Analysis: The documentary material, including departmental certificates and tax records, established that the services comprised soil work on a canal and construction of a culvert in connection with irrigation works. Such services fell within the exemption for construction-related services provided to Government in relation to canals, dams or other irrigation works under Serial No. 12(d) of Notification No. 25/2012-ST dated 20.06.2012.

Conclusion: The services were exempt from service tax; the tax demand, interest and penalties were unsustainable and were set aside.

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