TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1467
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....per the Tamil Nadu Water Supply & Drainage Board Act, 1970 (TWAD Act) created to carryout works related to water and drainage schemes in Tamil Nadu. TWAD awards contracts of laying pipelines or drainages on turnkey basis to independent contractors. The materials are procured by contractors themselves. As per Clause 7.9.1 of the Contract, TWAD, is empowered to subject the samples of materials procured by the contractors to various quality tests at its Quality Control Laboratories. As condition of the contract, the testing charges are to be borne by the contractor. Department was of the view that in doing such tests, TWAD, respondent herein, was rendering 'Technical Testing and Analysis' Services and is liable to pay service tax on the charge....
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.... Respondent executes contracts with independent contractors for the laying of pipes/drainage systems and in the process of ensuring that such pipes are laid properly, it conducts quality assessment tests on the materials to satisfy itself as to the quality of the materials used in laying out these systems. In the instant case, testing of water, designing of plant for purification of water, conducting research relating to water supply, etc. for establishing and maintaining schemes incidental to water supply and drainage is a statutory obligation accorded to Respondent under Section 16 of the TWAD Act. However, to properly fulfil such function, the Respondent must ensure that the materials used are of satisfactory quality, or must regularly v....
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....Order-in- Appeal. 3.4 Though the period under dispute is prior to 01.07.2012, the education guide lends clarify on the concept of activity for consideration, which alone is liable to service tax. 3.5 The fact that there is no quid pro quo between the Respondent and the contractor so as to make the transaction liable to service tax has been recognised in paragraph 8 of the OIA impugned by the Appellant Department. 3.6 The testing activity is rendered to effectuate its own objectives of instituting a water supply scheme. Therefore, where the present testing activity is performed by the Respondent for the purpose of fulfilling its own objectives under the statute, it cannot constitute a service on which tax would be leviable. Furthermore, t....
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....e produced by the contractor for the pipes used in the work. The Engineer shall have the right to test the pipes, wherever felt necessary for its quality. All testing charges should be borne by the contractor." 5.2 The above clause makes it necessary to test the pipes. Such testing is done not at the behest of the contractor. In fact, the contractor would be happy to use all materials procured without any testing. The TWAD in order to ensure standard of quality of the pipes for the works done by TWAD has made it obligatory on the part of contractor to get the pipes tested. The contractor would not get any benefit by such testing and there is no desire on the part of contractor to test the pipes. In CBEC Education Guide (TRU-Circular 20/6....
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.... rendered to him. The testing fee therefore does not take the colour or character of 'consideration'. 5.4 In Cricket Club of India Ltd Vs CST, Mumbai 2015 (40) STR 973 (Tri. - Mum.) the Tribunal has discussed a similar aspect in para 11 as under : "11. Owing to its inherent intangibility, a service transaction becomes recognizable only if a benefit accrues to a recipient and that explains the use of the phrase "provided or agreed to be provided" to determine taxability. It is taxable only if and when any, or a particular, service is rendered to a recipient. Consideration is, undoubtedly, an essential ingredient of all economic transactions and it is certainly consideration that forms the basis for computation of service tax. However, exi....