2024-VIL-1731-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Construction of dam, Works Contract service - Appellant entered into an agreement with the Contractor to undertake "earthwork leveling works involving drilling, blasting, excavation and leveling of Hard Rock and soils" for the Irrigation Project - Contractor had been awarded the work of constructing part of the dam from the Principal Contractor, who was awarded the work by the Government of Andhra Pradesh for construction of the dam - Dept denied the appellant's claims for exemption under Notification 25/2012 on the grounds that the appellant's activities were not directly provided to the Government and were in the nature of site formation services, not construction of the dam - Whether the appellant's services are eligible for exemption under Sl. No. 12(d) of Notification 25/2012 for services provided for the construction of a dam - HELD – The appellant's activities of site formation, excavation, and removal of soil and rock, though a precursor to the construction of the dam, cannot be considered as "construction of a dam" within the meaning of the exemption. The Tribunal relied on the principle of strict interpretation of exemption notifications and the fact that site formation services were separately classified and exempted earlier but no such exemption is available post-2012. Thus, the appellant's services are not eligible for exemption under Sl. No. 12(d) – the demand of service tax and equal penalty on the appellant is upheld and the appeal is dismissed - Whether the appellant is entitled to the exemption under Sl. No. 12(d) even though the services are provided to the Contractor and not directly to the Government - HELD - Even if the services are provided indirectly to the Government through the Contractor, the appellant would not be eligible for the exemption as the activities themselves are not covered under the exemption notification. The fact that the ultimate beneficiary is the Government does not make the appellant's services eligible for exemption - Whether the appellant's activities can be considered as "works contract service" under the Finance Act, 1994, and thus eligible for exemption under Sl. No. 29(h) of Notification 25/2012 - HELD - The appellant's activities do not involve the transfer of property in goods, which is a essential requirement for the activities to be considered as WCS. The Tribunal also noted the lack of evidence that the appellant had discharged any VAT on the activities, which would have indicated the presence of a deemed sale. Therefore, the appellant's activities cannot be considered as WCS, and they are not eligible for exemption under Sl. No. 29(h) of the notification.
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