M/S.H.M. Satyanarayan vs Commissioner Of Central Excise, Nagpur

(Arising out of Order-in-Original No. 17/ST/2011-12/C dated 28/10/2011 passed by Commissioner of Central Excise, Nagpur)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

====================================================== M/s.H.M. Satyanarayan Appellant Vs. Commissioner of Central Excise, Nagpur Respondent

Appearance: Shri G.L. Des pande, Advocate for Appellant Shri R.K. Das, Deputy Commissioner (AR), for Respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing : 16/09/2015 Date of Decision : 16/09/2015

ORDER NO

Per: M.V. Ravindran

This appeal is filed against Order-in-Original No. 17/ST/2011-12/C dated 28/10/2011.

2. Heard both sides and perused the records.

3. The issue involved in this case is regarding the service tax liability of the appellant under the category of Commercial or Industrial Construction Services. The appellant is undertaking the activity of laying of Optical Fiber Cables for various telecom service providers. It is the case of the Revenue that such activity is taxable, while it is the case of the appellant that CBEC vide circular no. 123/5/2010-TRU dated 24/05/2010 has clarified that laying of cables under or alongside the roads not is a Taxable Service under any class of sub section (105) of Section 65 of the Finance Act 1994.

4. We find that said circular is clearly applicable as the case in hand and the adjudicating authority should have followed the said circular and dropped the proceedings initiated by the show cause notice whether as it may. We find from the records that the appellant had under taken only the activity of laying of cables alongside the road or under the roads, for various telecom service providers. We find that the judgment of this Tribunal in the case of Surindra Engineering Co. Ltd. 2014-TIOL-2007-CESTAT-Mum is more or less on the similar set of facts, which included the laying of pipelines. Similar view was expressed by this bench in the case of Sanjay Tah Eng. & Contractors, vide order no. A/298/11/CSTB/C-1, was considering a similar issue. We reproduce the entire order which is as under.

2. ' The appeal filed by the assessee is against the order of the Commissioner (Appeals) dismissing their appeal (filed against an adverse order of the original authority) on the sole ground of non-compliance with Section 35F of the Central Excise Act. In adjudication of a show-cause notice, the original authority had demanded Service Tax of over Rs.16 lakhs from the assessee and imposed penalty on them. The demand of tax was for the period 2003-08 and on the ground that the assessee had provided Erection, Commissioning or Installation services to Bharat Sanchar Nigam Ltd. (BSNL) without paying Service Tax thereon. In the appeal filed against the original authority's order, the assessee also filed an application for waiver of pre-deposit of the adjudged dues. The appellate authority disposed of this application by an order directing the assessee to pre-deposit the entire amount of Service Tax, which was not deposited. After expiry of the time granted for pre-deposit, the appellate authority dismissed the assessee's appeal on the aforesaid ground.

3. After examining the records and hearing both sides, we find that, during the material period, the appellant had provided services for trenching and laying underground telephone cables, cable jointing, pillar constructions, DP fitting excavation, recoveries of cable, coiling and de-coiling of cables etc. to BSNL, Bhandara under a contract covering the said period but did not pay Service Tax on the said activities as, according to them, the activities did not amount to any taxable service. According to the Revenue, the above activities amounted to Erection, Commissioning or Installation as defined under Clause 39(a) of Section 65 of the Finance Act, 1994 and hence liable to Service Tax under Section 65(105)(zzd) of the said Act. According to the lower appellate authority, the assessee had no prima facie case on merits. Hence the direction for pre-deposit and upon non-compliance by the party, dismissal of their appeal.

4. Today, learned Counsel for the appellant claims prima facie case on the strength of both Board's Circular No. 123/5/2010-TRU dated 24.5.2010 and Hon'ble High Court's judgment in Commissioner of Central Excise, Chandigarh Vs. Rajeev Electrical Works 2010 (18) STR 705 (P&H). In the Board's Circular, it was clarified inter alia that laying of cables under or alongside roads did not constitute any taxable service under Section 65(105) of the Finance Act, 1994. The Hon'ble High Court in the case of Rajeev Electrical Works (supra) had held that laying of pipes in wail/roof/floor for crossing of wires, fixing junction box, MS box, wooden box, fixing cable trays to lay cables, digging earth to lay the cables and digging earth pits for earthing of equipments did not amount to installation of plant, commissioning of machinery/ equipments etc. We have heard learned SDR also, who has made a feeble attempt to distinguish the cited case of Rajeev Electrical Works (supra) and also the case examined by the Board in the cited Circular.

5. We have found prima facie case for the appellant in view of the cited Circular and decision. Hence, the appellant need not be asked to make any pre-deposit. Of course, we are not unmindful to the fact that neither the Circular nor the decision was before the learned Additional Commissioner when he took the adverse view.

6. The impugned order is set aside and the appeal is allowed by way of remand to the original authority for de novo adjudication of the dispute in accordance with law after giving the assessee a reasonable opportunity of being heard. Needless to say that the Board's Circular and Hon'ble High Court's decision, among other things, be considered by the adjudicating authority.

5. It can be seen from above reproduced findings of the bench that the issue in that case and the issue in the case in hand is similar. Learned departmental representative tried to differentiate the case Law on the ground that appellant herein had under taken the activity of laying of optical fibers cables but missed the point that they are also cables and are use by the Telecommunications Service Providers.

6. At this Juncture, learned departmental representative submits that the appellant has deposited an amount of Rs. 1.22 crrores approximately, and collected the same from their clients or their customers. Learned counsel submits that they will not seek the refund of said amount considering the undertaking given by the learned counsel, we hold that except the amount as already deposited by the appellant during the proceedings the demand of service tax fails and the impugned order is liable to be set aside.

7. In view of the forgoing impugned order is set aside and the appeal is allowed.

(Operative portion of the order pronounced in court on completion of the hearing of case).

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

akp 1 4 APPEAL No. ST/681/11-Mum