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2023 (11) TMI 819 - CESTAT CHENNAIShort payment of service tax - Works Contract Service - contract with Tamilnadu Water and Drainage Board (TWAD) which was a turnkey / composite contract for supply of PSC pipes, for laying of the pipes as well as for executing other installations for the transportation of water as per terms of the contract of water project formulated by TWAD Board - HELD THAT:- The appellant has been given a contract by TWAD Board for laying pipelines for drinking water supply project. In page 36 of the appeal paper book the appellant has enclosed letter dt. 17.09.2008 issued by the TWAD with regard to the contract. From perusal of same, it cannot be said that appellant is a sub-contractor for providing the services - On perusal of the definition of Works Contract Service, it can be seen that the sub-clause (b) of the definition provides that the laying of pipeline for non-commercial or non-industrial purposes would not attract levy of service tax. In the present case, the activity of laying of pipelines is done by the appellant for TWAD Board which is for the Government and included for supply of drinking water project. The very same issue was considered by the Larger Bench of the Tribunal in the case of M/S. LANCO INFRATECH LTD. AND OTHERS VERSUS VERSUS CC, CE & ST, HYDERABAD [2015 (5) TMI 37 - CESTAT BANGALORE (LB)] where it was held that Construction of canals for irrigation or water supply; construction or laying of pipelines/ conduits for lift irrigation conceived and integrated into a dam project, must be classified as works contract "in respect of dam" and is thus excluded from the scope of "Works Contract Service" defined in Section 65(105)(zzzza) of the Act, in view of the exclusionary clause in the provision. The decision of the Larger bench was followed recently by the Hyderabad Bench of the Tribunal in the case of PROGRESSIVE CONSTRUCTIONS LTD. VERSUS COMMISSIONER OF SERVICE TAX HYDERABAD – SERVICE TAX [2023 (4) TMI 1132 - CESTAT HYDERABAD] to hold that demand cannot sustain - This Bench also in the case of M/S. SHRIRAM EPC LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE CHENNAI [2018 (11) TMI 1083 - CESTAT CHENNAI] had considered similar issue and held that demand of service tax on the activity of laying of pipelines for drinking water supply cannot sustain. The impugned order is set aside. Appeal is allowed.
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