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2023 (2) TMI 665 - AT - Service TaxTaxability of services provided by the respondent in relation to Hydro Electric Projects - services were provided to dams, which are exempted - non-inclusion of the material received free of cost in the assessable value and simultaneous availment of abatement - liability to discharge the service tax liability as a sub-contractor where the service tax has already been paid by the main contractor - period involved is April, 2005 to September, 2011. HELD THAT:- The works executed for a hydro electric project would be excluded from the taxable service of ‘works contract’ or ‘commercial or industrial construction’ if the services are provided in respect of tunnels and dams. The Commissioner has held that the exclusion of the dams and tunnels would cover all the works of hydro mechanical nature, including civil construction of dams and tunnels for the reason that a dam or a tunnel would not be complete without hydro mechanical works. The Commissioner, therefore, concluded that the civil works forming part of dams and tunnels would not be exigible to service tax under the Finance Act as they would fall within the exclusion clause - there is no error in the finding recorded by the Commissioner and indeed it finds support from various decisions of the Tribunal. In PES ENGINEERS PVT. LTD VERSUS CCE&ST, HYDERABAD-I AND (VICE-VERSA) [2017 (7) TMI 687 - CESTAT HYDERABAD], a Division Bench of the Tribunal while examining a matter where the assessee was engaged in large construction of projects relating to hydro electric projects observed that the activity undertaken for installation and commissioning of pressure shaft liners also called “steel liners/penstocks” would fall within the exclusion clause of the taxable service of ‘works contract’ - In M/S. MCM SERVICES PVT. LTD. VERSUS CST, DELHI [2017 (2) TMI 624 - CESTAT NEW DELHI], a Division Bench of the Tribunal examined whether the nature of work executed by the appellant therein relating to construction of dam, which would be a part of the hydro electric project, would fall within the exclusion clause of the taxable service of ‘works contract’. Thus, it has to be held that the Commissioner committed no illegality in holding that the works undertaken by the appellant would fall within the exclusion clause of the definition of ‘construction and industrial construction’ service and the taxable ‘works contract’ service. Material supplied free of cost - HELD THAT:- The issue as to whether service tax can be levied on the cost of materials supplied free of cost has now been settled by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] It has been held that service tax cannot be levied on the amount of material supplied free of cost. Thus, as the Supreme Court has held that the value of goods which are provided by the service recipient free of charge cannot be included in the gross amount charged by the service provider, the finding recorded by the Commissioner does not suffer from any error. Whether a sub-contractor is required to discharge the service tax liability, even if the service tax liability has been discharged by the main contractor? - HELD THAT:- The service tax liability would not leviable on the works involved in this appeal, it would not be necessary to decide this issue, though a Larger Bench of the Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [2019 (6) TMI 518 - CESTAT NEW DELHI] has held that a sub-contractor would have to discharge the service tax liability even if the main contractor has discharged service tax liability on the activity undertaken by the sub-contractor in pursuance to the contract. There is no merit in this appeal - Appeal dismissed.
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