No Service Tax on laying of cables under or alongside roads - Board Clarifies
IT has come to the notice of the Board that disputes have arisen in some parts of the country regarding applicability of service tax on certain activities such as:
(i) shifting of overhead cables to underground on account of renovation/widening of roads;
(ii) laying of electrical cables under or alongside roads/railway tracks;
(iii) between grids/sub-stations/ transformers the distribution points of residential or commercial complexes;
(iv) electrification of railways, installation of street-lights, traffic lights, flood-lights.
The taxability of these different activities were examined after taking into account the scope of all taxable services that are taxable such as site formation/excavation/ earth moving service, commercial or industrial construction services, erection, commissioning or installation services, works-contract service and also those which are covered under the Finance Act, 2010 and clarified as follows:
S. No. | Activity | Status |
|---|---|---|
1. | Shifting of overhead cables/wires for any reasons such as widening/renovation of roads | Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 |
2. | Laying of cables under or alongside roads | Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 |
3. | Laying of electric cables between grids/sub-stations/transformer stations en route | Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 |
4. | Installation of transformer/ sub-stations undertaken independently | Taxable service, namely Erection, commissioning or installation services [section 65 (105] ( zzd ]. |
5. | Laying of electric cables up to distribution point of residential or commercial localities/complexes | Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 |
6. | Laying of electric cables beyond the distribution point of residential or commercial localities/complexes. | Taxable service, namely commercial or industrial construction' or ‘construction of complex' service [section 65(105) ( zzq ) /( zzzh )], as the case may be. |
7. | Installation of street lights, traffic lights flood lights, or other electrical and electronic appliances/devices or providing electric connections to them | Taxable service, namely Erection, commissioning or installation services [section 65 (105] ( zzd ]. |
8. | Railway electrification, electrification along the railway track | Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 |
The Board states that the conclusions drawn above are essentially general in nature and would have to be applied in an individual case depending on its facts and circumstances.
One of our commentators remarked, laying of electric cables alongside a road is not taxable, but fixing a bulb to it is taxable?!
CIRCULAR NO. , Dated: May 24, 2010