Category - "telephone cable" and applicability of service tax

[sunil mehta]

Dear Sir, A company gets work-order to lay down 'telephone cables' underneath the road surface in different areas.The 'tel.cables' and machinery for digging are supplied by the main service receiver. 1)The company has to 'dig' out the road surface(excavate the ground) 2)& then it lay down the telephone cables at a predetermined depth under ground 3)and then re-surface' it('back-filling' of earth mud) after job is over. service receiver pays the company on the basis of 'length kms.'work completed.Machines used in 'digging'/resurfacing ' road is supplied by service receiver. or taken on hire by the company. Note:The rates quoted for both the work i.e.excavation of earth (for cable laying) and actual laying of cables & back-filling of earth are separately given in work order. The company either(i) employs its own labour or(ii)It takes labour work force from labour supply contractor or(iii)Sub-lets part of the work to another contractor. Query:1)Under which category the work of : a)excavation work i.e digging of earth/road will be covered/ b)actual cable laying under ground and 'back-filling' of earth work will be covered? c)what about ser.tax applicability to sub-contractors(may be 2 or 3sub-contractors)?

[Surender Gupta]

The service mentioned in the query is falling under “Erection, Commissioning and Installation” services. Further sub-contractor is not exempt from service tax.

service tax is not applicable for cable laying activities ..

 

Dept circular 123/2010 dated 24.05.2010..

Punjab and Haryana high court verdict ..Rajeev electricals Vs CCE chandigarh C.E.A No 64 of 2008..(2010-TIOL-438-HC-P-H-ST)

CESTAT ,Kolkatta Baba Constructions Vs CCE ranchi.. etc may be referred.

AI Summary

Service tax applicability to cable laying works disputed; treated as installation services by some, exempt per circular and case law.
Service tax applicability to roadside telephone cable laying-excavation, cable placement and back filling-is contested: one view classifies the work as Erection, Commissioning and Installation services subject to service tax with subcontractors liable, while another relies on a departmental circular and case law to argue that cable laying is not taxable.