TaxTMI 
TaxTMI 
2017 (3) TMI 1100
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....commissioning and installation services' and 'works contract service'. Pursuant to audit it appeared to Revenue that the appellants have not paid service tax on erection, commissioning and installation service' being construction of sewage pumping station, water treatment plants, sewage treatment plant and sewage works. The SCN further observes that the appellant assessee had pleaded that the works of laying of pipelines for sewage etc. are not for commerce and trade and as such the same is exempted from service tax in terms of provisions of Explanation of Section 65 (105)(zzzza) of the Finance Act, 1994K. The appellant contested the show cause notice and the same was adjudicated and the proposed demand confirmed observing, that applying the principle of classification as provided under sub-section (2) of Section 65A, sub-clause (ii)(b) of Section 65(105)(zzzza) of Finance Act, 1994, provides the most specific description of services of laying drains or pipes. Accordingly, it was held that services of laying pipelines and conduits is a taxable service as defined under "works contract" vide clause (ii) (a) of Explanation to Section 65(105)(zzzza) of Finance Act, 1994 and....
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....e services specified in clauses (a) to (d) or is a wholly distinct taxable service and is exigible to Service Tax as an independent species of works contract service? (D) Whether, even if clause (e) in Explanation (ii) of WCS is considered a distinct and independent service, where construction of canals for irrigation purposes and laying of pipelines either as part of lift irrigation systems or for transport and distribution of water is undertaken for Government/Government undertakings, the same is more appropriately covered under clause (b) of WCS, i.e., construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, by applying principles of classification set out in Section 65A (2)(a) & (b) and thus fall outside the ambit of levy, since the activity is not primarily for the purpose of commerce or industry; or whether a contrary view that clause (e) being an independent entry, activities falling thereunder would be taxable even if the rendition of service thereby or thereunder, was not primarily for non-commercial or non-industrial purposes? and (E) Where execution of the whole or a part of the work is subcontracted on back to back basis by t....
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....Hume Pipe Co. Limited and other decisions [referred to in paras 15(i) and (ii) (supra)], it is clear that laying of pipelines/conduits for transmission of water or for disposal of sewerage falls within the ambit of CICS and not ECIS; and where provided to Government/Government undertakings and for supply of water for irrigation or consumption or for disposal of sewerage, the activity is non-commercial, non-industrial, is covered by the exclusionary clause in the definition of CICS and is not exigible to Service Tax. Since a turnkey/EPC contract would inhere elements of several services, consisting of combination of different services, the service which gives such contract its essential character would be laying of pipelines or conduits. A turnkey/EPC contract for laying of pipeline/conduit should therefore; logically be classified under clause (b), Explanation (ii) of Section 65(105)(zzzza), on and from 1-6-2007 as well. This is the consequence of applying Section 65A(2)(b) of the Act and this position is clarified in Board Circular No. 123/5/2010-TRU, dated 24-5-2010. From the structural arrangement of the definition of works contract set out in Explanation (ii) of Section 65(105....
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....s for transmission of water including by lift irrigation would be, when these works are conceived as integrated to a dam project, works contract "in respect of a dam" and thereby excluded from the purview of WCS". 3.4 The ld. Counsel further points out that the Larger Bench's ruling of this Tribunal in the case of M/s Lanco Infratech Ltd. (supra) have been followed and relied upon by Hon'ble Madras High Court in the case of Indian Hume Pipes Company Ltd. 2015 (40) STR 214 (Mad.) wherein for similar works executed, laying of pipes for water supply, the Hon'ble High Court held that laying of long-distance pipelines to enable State Water Supply and Drainage Board to supply water in public interest and to take care of civil amenities, the Tribunal rightly held that the said activity is a part of "construction activity" not commercial in nature, hence, not covered under erection, commissioning or installation service and hence, is exempted from service tax levy. Accordingly, the learned Counsel prays for allowing the appeal with consequential benefits. 3.5 The Id. counsel further points out that only with regard to erection and commissioning of service station (electrical)....