The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand under works contract service for the supply of Pre-Stressed Concrete (PSC) Pipes on the ground of service tax exemption eligibility.
Indian Hume Pipe Co. Limited, the appellant assessee was engaged in the manufacture of various sizes of PSC (Pre-Stressed Concrete) Pipes and had Central Excise Registration as a manufacturer and also had obtained Service Tax Registration for providing various output services.
The assessee had entered into a contract with Tamilnadu Water and Drainage Board (TWAD) which was a turnkey/composite contract for the 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.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand for the short-paid service tax under ‘Works Contracts Service’ for the period 04.06.2009 to 12.01.2010.
R. Sudhinder, the counsel for the assessee contended that the activity rendered by the assessee is exempted from the levy of service tax for the reason that it was not like providing services for Commercial or Industrial purposes and service was carried out to drink water supply of TWAD.
R. Rajaraman, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable to pay the service tax demand raised by the revenue.
The Bench observed that in the case of Shriram EPC Ltd. Vs CGST & Central Excise, Chennai, the court held that the demand for service tax on the activity of laying pipelines for drinking water supply cannot be sustained. The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) quashed the service tax demand imposed on the assessee while allowing the appeal filed by the assessee.
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