Service Tax – Construction of Dam, Roads and tunnel as part of a Power Project – No Tax – Commissioner
Many of the assessees and consultants feel that the Departmental orders are always against the assessees and Tribunal is the first stage where an assessee can hope to get some justice.
Here is an order passed by a Commissioner dropping a whopping demand of about Rs. 25 Crores, both on merits and limitation.
The Commissioner observed,
“I find that the impugned notice alleges construction of hydro-electric power project - and states that the civil work undertaken is nothing but integral part of construction of Power Project (a commercial complex). Though it has been admitted that civil work involves construction of dam, tunnels and roads, a view has been adopted to call it not a construction of common dam, tunnels or roads (in the impugned notice). That means the impugned notice attempts to make a distinction between construction of ordinary/common dam, tunnels and roads which is excluded from purview of Service Tax and construction of dam, tunnels & roads as an integral part of hydroelectric power project. Does the statute permit so? I find that the statute does not provide any explanation to the words dam, tunnels and roads for its exclusion from the service in question. This can only mean that construction of dam, tunnels and roads is excluded, irrespective of any condition like integral part of hydroelectric power project. Moreover, it is a common fact that dams are mostly used for generating hydroelectric power. It cannot be a condition that if dams are used for generating power, it is included in the purview of Service Tax.
The impugned notice also admits that as per the agreement the said assessee have only undertaken the civil work of the power project. They have categorically stated that they did not do any work in respect electrical and mechanical work of the project. This shows that they have not constructed the entire project on turnkey basis. I am, therefore, of considered opinion that civil work undertaken by the said assessee includes construction of dam, tunnels and roads. There is no scope of segregating the agreement for considering any part of work as taxable service. The entire work is excluded from the purview of taxable service, "Construction of Commercial or Industrial Complex". So I find that the demand of Service Tax amounting to Rs.24 ,19,15,624 /- is not sustainable.
Order No. dated June 16, 2009 of the Commissioner of Service Tax, Kolkata