TMI Blog2011 (1) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose is supply of water to the needy citizens of the State. The term used “for commerce” would mean that only purpose would be buying and selling, which is definitely not the case here. The term used “primarily for commerce” would mean that primary purpose should be buying and selling and the other purposes also may be served incidentally. In this case, purchase and sale of water are incidental and the main purpose is supply of water to needy citizens of the State. - Decided in favour of assessee. - ST/184/2007 - A/190/WZB/AHD./2011 - Dated:- 25-1-2011 - MRS. ARCHANA WADHWA, B.S.V. MURTHY, JJ. For Appellant: Shri P K Sahu, Adv. For Respondent: S K Mall, SDR ORDER B.S.V. Murthy, Technical Member - The appellant entered into a contract with M/s. Gujarat Water Supply Sewerage Board (GWSSB) as per the works contract dated 25-3-2004 for the work of design, build, operate contract for distribution of water under Mehsana District Water Supply Scheme. In the impugned order, it has been held that the work executed by the appellant is classifiable as commercial or industrial construction service and liable to Service Tax with effect from 16-6-2005. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commercial or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams; 5. The issues to be considered by us are whether by purchasing water at one rate and selling at higher rates, the pipeline constructed can be said to be used or to be used primarily for commerce or industry so that the activity undertaken by L T for GWSSB becomes liable to Service Tax. Whether the extended period can be invoked on the ground that the appellant did not declare the information regarding the service rendered by them, thereby suppressing the fact with intent to evade tax and under these circumstances whether the penalty is imposable or not. 6. The learned Advocate on behalf of the appellant relied upon the decision of the Tribunal in the case of Nagarjuna Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It would only mean buying and selling and in terms of above two decisions, the activity in this case is commerce and result of the activity which may be profit, loss or even no profit or loss, is not relevant. He also argued that the meaning of the term commerce or industry used in the definition have to be understood as they are commonly used. The words have been used to identify a category of activity. The definition does not talk about the status or the definition of the receiver. From the plain reading of the definition of the service, it is apparent that any service receiver irrespective of its status or definition or composition, if utilizing the pipeline for Commerce or industry will render the service provider liable for Service Tax. 9. First of all, we find the claim of the learned SDR that the Tribunal did not consider the meaning of commerce while rendering the decision in the case of Nagarjuna Construction Co. Ltd. (supra) is not correct. The relevant Paragraph 9 of the decision is reproduced below : 9. We find that GWSSB discharges an important duty and responsibility of the Government to provide drinking water to the people residing in its jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or to be used primarily for commerce or industry, and the Tribunal had also considered the meaning of commerce or industry we would be bound by Co-ordinate Bench decision and judicial discipline requires that we follow the same. In this connection, it is worthwhile to cite the decision of Hon ble High Court of Mumbai in Mercedes Benz India (P.) Ltd. v. Union of India [Writ Petition No. 1614 (Bom.) of 2010, dated 17-3-2010]. In that case, the Tribunal had not followed the Co-ordinate Bench decision on the ground that the decision did not address the grievance of the Revenue and had not laid down a clear ratio. The Hon ble High Court observed as follows : 17. We are not happy to observe but constrained to say that one must remember that pursuit of the law, however glamorous it is, has its own limitation on the Bench. In a multi-judge court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neration or otherwise and includes a department of Government which carries on such business and any firm or Hindu joint family and any society, club or association which purchases goods from or sells or supplies goods to its members and also includes a casual dealer as therein defined . Hon ble High Court observed that two important elements have got to be established before one can be said to be a dealer under the Act: (i) the person must carry on business; and (ii) the business must be of purchase, sale or supply of goods. The decision would show that Hon ble High Court was considering the meaning of business and dealer as defined in the Act and was nowhere concerned with commerce. No doubt, a view was taken that whether the sale was for profit or not, was not relevant. In fact, under the Sales Tax Act, the tax is not levied on the profit, but on the sales price. Therefore, the profit would not be relevant. Moreover, mere supply of goods is also covered. 13. Both the decisions cited by learned SDR have emerged from different set of facts. We find that both these decisions are not applicable. 14. Before we proceed to decide whether the pipeline laid in this case can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was set up has a preamble which reads as An Act to provide for the establishment of a Water Supply Sewerage Board for the rapid development and proper regulation of water supply and sewerage services in the State of Gujarat . The responsibility of the Board is rapid development and proper regulation of water supply and sewerage services and not commercial or industrial activity. The provision in the Act enabling the Board to borrow money or lending money or receiving grant for entering into contract, have been incorporated to serve the purpose for which the Board has been set up. The objective is to execute water supply and sewerage work for the benefit of both rural and urban communities as mentioned by Member Secretary in his letter dated 14-6-2007. A perusal of the Annual Report of the company would show that there is no profit and loss account at all which would be found in any organization, which is classifiable as commercial or industrial establishment. Further, the auditors have clearly observed that the balance sheet and Income-Expenditure account dealt with by this report comply with the accounting standards applicable to non-commercial and non-business entities. Enactm ..... 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