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2021 (8) TMI 801 - AT - Service TaxCommercial or industrial construction service - services rendered to Government bodies and other entities - benefit of exemption has been denied for the reason that the services have been rendered in the factory area - Scope of 'Factory' - ETPs constructed for ONGC - STPs Constructed for NBCC - Order is beyond the show cause notice or not - HELD THAT:- The contention regarding scope of SCN would be examined, if considered necessary, after the second and the third submissions relating to ETPs constructed for ONGC and STPs constructed for NBCC are decided, because in case these two matters are decided in favour of the appellant it may not be necessary to examine whether the order went beyond the show cause notice. ETPs constructed for ONGC - HELD THAT:- A factory is a premise where ‘excisable goods are either manufactured’ or a ‘process in relation to their manufacturing is undertaken’. Extraction of crude oil would not qualify as ‘manufacture’ as the activity involving extraction of natural resources would qualify as ‘production’, which is independent and different from ‘manufacture’ - Undertaking of an activity which results in emergence of a new commodity may amount to ‘manufacture’, such as in the case of manufacturing of medicines or cosmetics or textile. However, extracting of natural resources, including crude oil would amount to ‘production’ and not ‘manufacture’. In COMMISSIONER OF INCOME-TAX VERSUS SINGARENI COLLIERIES COMPANY LIMITED [1995 (11) TMI 36 - ANDHRA PRADESH HIGH COURT], the Andhra Pradesh High Court examined whether winning or excavation of coal from the mines amounted to production or manufacture. The High Court, after placing reliance on the decision of the Supreme Court in N.C. Budharaja, held that the mining or excavation of coal would qualify as ‘production’ - In COMMISSIONER OF INCOME-TAX VERSUS SESA GOA LTD. [2004 (11) TMI 14 - SUPREME COURT], the Supreme Court held that extraction of iron ore would amount to ‘production’. However, the Supreme Court had not addressed the question as to whether extraction of iron ore would amount to ‘manufacture’. It has to be determined whether a premise where only production takes place, would qualify as a factory. A factory would include a premise where excisable goods are manufactured or where a manufacturing process in connection with production of goods is carried out. Thus, when the activity in relation to extraction of natural resources does not amount to manufacture the first part of the definition of factory would not be applicable. The scope of the second part which includes a manufacturing process in connection with production of goods caters to post-production processes which are in relation to ‘manufacture’. This would include activities such as washing of coal; or withering of tea leaves; or refining of crude oil. This would be a manufacturing process, which is in connection with production. The definition of ‘factory’ caters to manufacturing processes in respect of both, manufactured and ‘non-manufactured goods’. In case of manufactured goods, the premise where the manufacturing activity is undertaken would qualify as a factory. In case of non-manufactured goods such as natural resources, the premises where the post-production processes take place towards making the produce commercially viable would qualify as a factory - the oil fields of ONGC, where only extraction of crude oil takes places, would not qualify as a ‘factory’. The Commissioner committed an error in denying the benefit under Serial No. 13(d) of the Notification dated 20.06.2012. STPs Constructed for NBCC - HELD THAT:- The STP is set up for the purpose of removing pollutants and contaminants from wastewater, primarily from household sewage. It includes various processes so as to obtain clean and environment safe treated waste water. Hence, STP may be understood as a Wastewater Treatment Plant - the ‘effluent’ means any waste material which is discharged into the environment (lake or river), including sewage. A treatment plant for management of effluent would, therefore, also include a sewage treatment plant. The Commissioner failed to appreciate the purpose of both the treatment processes. The exemption benefit provided by Notification dated 20.06.2012 at Serial No. 13(d) would, therefore, be available to the appellant. The Commissioner committed an illegality in denying the benefit of the Notification dated 20.06.2012 at Serial No. 13(d) to the appellant for ETPs constructed for ONGC and the STPs constructed for NBCC - Appeal allowed - decided in favor of appellant.
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