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TMI Blog2023 (11) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... llant did not pay service tax on the consideration received in respect of such contracts. The department was of the view that the activity would fall under "Works Contracts Services" w.e.f. 01.06.2007. Show cause notice dt. 23.06.2010 was issued proposing to demand the short paid service tax under 'Works Contracts Service' for the period 04.06.2009 to 12.01.2010 along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. On appeal, Commissioner (Appeals) upheld the same. Hence the appellant is now before the Tribunal. 2. The Ld. Counsel Sri R. Sudhinder appeared and argued for the appellant. Ld. Counsel adverted to the definition of 'Works Contracts Service' as per sub clause (zzzza) of clause (105) of Section 65 of the Finance Act, 1994 which reads as under : "any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. For the purposes of this sub-clause, "Work Contract" means a contract wherein, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s involving laying of the pipelines and other connected activities when provided to Government would be exempt from levy of service tax. 2.4 It is submitted that in the appellant's own case, the Tribunal had allowed the appeal by setting aside the demand against which the Department filed Civil Miscellaneous Appeal No.1140/2009 before the Hon'ble Jurisdictional High Court. As per the judgment dt. 8.08.2015, the Hon'ble High Court upheld the decision of the Tribunal setting aside the demand. Ld. Counsel was fair enough to submit that the department has filed further appeal before the Hon'ble Supreme Court which is pending. It is submitted that the decision of the Larger Bench of the Tribunal in the case of Lanco Infratech Ltd. Vs CC, CE & ST, Hyderabad (supra) is also appealed by the parties before the Hon'ble Supreme Court and it is pending. 2.5 In the recent decision in the case of Progressive Constructions Ltd. Vs CST Hyderabad reported in MANU/CH/0012/2023 on similar set of facts the Tribunal held that laying of pipelines is outside the purview of levy of service tax, under WCS. 2.6 The decision of this Bench in the case of Shriram EPC Ltd. Vs CGST & Central Excise, Chennai r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether laying of pipelines for lift irrigation systems, transmission and distribution of drinking water or sewerage, undertaken for Government/Government undertakings should be classified under ECIS as erection, commission or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise; or installation of plumbing, drain laying or other installations for transport of fluids, enumerated in Section 65(105)(zzd) and defined Section 65(39a), during 16-6-2005 to 31-5-2007; or must be classified under CICS, as amounting to construction of pipeline or conduit; and if classifiable under the later provision, whether the activity is not taxable since it is not used or to be used, engaged or to be engaged primarily for industry or commerce? (B) Whether construction of canals for irrigation purposes and laying of pipelines including as part of lift irrigation systems, undertaken for the Government/Government undertakings is liable to Service Tax under WCS as turnkey projects, including engineering, procurement and construction or commissioning projects under clause (e) of Explanation (ii) in the definition of WCS or is excluded from the ambit of WCS since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation of irrigation, water supply or sewerage disposal would be for a non-commercial, non-industrial purpose or user and thus excluded in view of the exclusionary clause in clause (b) of WCS definition; and (iii) construction of canals, pipelines or conduits for transmission of water including by lift irrigation would be, when these works are conceived as integrated to a dam project, works contract "in respect of a dam" and thereby excluded from the purview of WCS. ... ... .... 21. In the light of the foregoing analyses, we record our conclusions on the several issues framed, as follows : (a) Issue (A) : Laying of pipelines/conduits for lift irrigation systems for transmission of water or for sewerage disposal, undertaken for Government/Government undertakings and involving associated activities like trenching, soil preparation and filling, supporting masonry work, jointing of pipes, electro-mechanical works or pumping stations and like activity, is classifiable only under Commercial or Industrial Construction Service (CICS) for the period up to 1-6-2007 and not under Erection, Commissioning or Installation Service (ECIS); (b) Issues (B), (C) and (D) : (i) Construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (b); and (c) Issue (E) : Where under an agreement, whether termed as works contract, turnkey or EPC, the principal contractor, in terms of the agreement with the employer/contractee, assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act. 8. The decision of the Larger bench was followed recently by the Hyderabad Bench of the Tribunal in the case of Progressive Constructions Ltd. Vs CST Hyderabad - reported in MANU/CH/0012/2023 to hold that demand cannot sustain. This Bench also in the case of Shriram EPC Ltd. Vs CGST & Central Excise, Chennai (supra) had considered similar issue and held that demand of service tax on the activity of laying of pipelines for drinking water supply cannot sustain. 9. After appreciating the facts, provisions of law and the decisions as above, we are of the considered opinion that the demand cannot sustain. Ordered accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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