2026-VIL-1556-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption for services provided to Government entities and municipal authorities for water supply, Applicability of Entry No. 25 of Mega Exemption Notification No. 25/2012-ST - The Appellant provided operation and maintenance services for drinking water treatment plants (RO Plants or Nalkoops) installed at different locations for various government water supply entities and municipal authorities - Whether services for operation and maintenance of public water supply treatment plants for supply of treated drinking water through water supply infrastructure ordinarily entrusted to municipalities are exempt from Service Tax under Entry No. 25 - HELD - Entry No. 25 of Mega Exemption Notification No. 25/2012-ST provides exemption for services relating to any function ordinarily entrusted to a municipality in relation to water supply. The services rendered by the Appellant pertain to the operation of Nalkoop at different locations for supply of water to the public. The rate of operation is prescribed per Nalkoop per shift and per day which reveals that the appellant is receiving consideration solely for operation and supply of water. Provision and supply of treated drinking water through properly functioning water supply systems is ordinarily a function entrusted to a municipality - The Appellant was providing the same service to multiple municipal and water authorities which have statutory responsibility for water supply. The nature of service is identical across all service recipients- namely operation and maintenance of water treatment and supply infrastructure on behalf of Government water authorities. Since the services relate to supply of water by carrying out an activity ordinarily entrusted to a municipality, they are eligible for exemption - The Service Tax demand is set aside and the appeal is allowed
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