Relief to SAIL, Service Tax not Payable on Amount paid for supply of water by Odisha  Govt: CESTAT [Read Order]

In a ruling in favour of Steel Authority of India Ltd ( SAIL ), the Kolkata bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) held that service tax is not payable on amount paid for supply of water by Odisha  Government.

Shri Vasudev A. and Shri Deepro Sen appeared on behalf of the Appellant. Shri S. Mukhopadhyay and Shri K. Chaudhuri, Authorized Representatives appeared for the Respondent.

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The issue involved  is whether the appellant is liable to pay Service Tax on the supply of water by the Government of Odisha to the appellant, or not. The Tribunal found that the said issue has already been examined by this Tribunal in the case of M/s. National Aluminium Company Ltd. v. Commissioner of GST, Excise & Customs, Bhubaneswar, wherein it has been observed that “the supply of water by the Government from natural water sources i.e. Kerandi River of Upper Kolab Reservoir to the appellant falls under the category of “allocation/auction of natural resources”, which is liable to pay service tax w.e.f. 01.04.2016.

Since the appellant  justified in asserting that the Agreement executed between the appellant and the government is for supply of water for which charges are paid by the appellant on the basis of volume of water drawn and it is not a case of assignment of right to use natural resources of the government.

20. In this view of the matter no service was provided by the government to the appellant. The impugned order, therefore, deserves to be set aside on this ground alone.”

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In light of the judgement, the two member bench of Ashok Jindal, Member ( Judicial ) And K. Anpazhakan, Member ( Technical ) held that the appellant is not liable to pay Service Tax on the amount paid for supply of water by the Government of Odisha to the appellant. The Tribunal set aside the demand confirmed by way of the impugned order and ruled that no penalty is imposable on the appellant in the facts and circumstances of the case.

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