Order date – 15 September 2022

 Facts – 

• The Respondent, M/s L.R. Sharma, are engaged in laying long-distance pipelines by Delhi Jal Board (DJB) and for shifting these to enable Delhi Metro Rail Corporation (DMRC) in execution of the metro rail network. 
• They had been served with letters of inquiry in 2010 by jurisdictional tax authorities for submission of relevant tax returns and contracts.
• Show cause notice was issued on 15 October 2010 for recovery of ₹ 22,60,09,148/- as tax liability under section 73 of Finance Act, 1994 on gross receipts for providing of ‘erection, commissioning and installation service’ amounting to ₹ 201,83,25,807/- between 2005-2006 and 2009- 2010, on ₹ 2,08,51,440/- as consideration for providing ‘supply of tangible goods service’ from 2007-2008 to 2009-2010 and on ₹ 23,41,500/- received as consideration for ‘renting of immovable property’ between 2007-2008 and 2009-2010.
• The Respondent contended that ‘erection commissioning or installation service’ has been rendered. The said service was, along with others, included within the scope of ‘work contract service’ upon incorporation in Section 65 (105) of Finance Act, 1994 with effect from 1st June 2007 held that activity of laying pipelines for conveyance of water or sewerage, cannot be called is taxable service classifiable under section 65 (39a) of the Act and charged to tax. 
• Aggrieved, by the Order of Commissioner Appeals, Revenue has filed an appeal.

Issue – 

• Whether activities carried by respondent is liable to Service Tax under the category of 65 (39 a) of the Act?

Order – 

• The Tribunal perused the sample contract and observed respondent was also responsible for supply of material on which tax has been claimed to have been discharged; in the absence of any controverting of this submission the ‘taxable service’ within which the respondent was sought to be fitted would not apply.
• Also, in terms of the decision of the High Court of Madras in M/s Indian Hume Pipes Co Ltd, the laying of pipelines as an adjunct of civil structure would alone bring the activity within the ambit of section 65 (105) (zzd) of Finance Act, 1994 and from the nature of the work undertaken, it is apparent that the activity contracted out by the respondent does not relate to civil work for facilitating the network of Delhi Metro Rail Corporation.
• Also, the Tribunal held that even if Delhi Metro Rail Corporation were to be the final recipient of the service rendered by the respondent, the decision of the High Court of Calcutta in M/s Afcons Infrastructure Ltd. must be followed and accordingly categorising them as ‘railway’ forecloses taxability even if the dispute pertains to laying of water pipelines.
• Appeal filed by Department dismissed.