No Service Tax Payable On Laying Of Cables Under Or Alongside Roads: CESTAT Kolkata

Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) opined that the entire demand confirmed in the impugned order under these specific categories is not liable to Service Tax, as all the amounts received by the assessee pertain to laying of cables under or alongside roads, which is not leviable to Service Tax as clarified by C.B.E.C. vide Circular No. 123/5/2010‑TRU.

In the case at hand, the assessee/appellant was a specialised contractor engaged in laying of underground telecom/optical fibre cables using trenchless technology as well as conventional trenching methods for major telecom operators such as BSNL, Airtel, Vodafone, Reliance and Tata.

In some cases, the customers paid Service Tax, and in some cases, the customers contended that the said activities were not liable to Service Tax and accordingly, had not paid Service Tax.

It was alleged that the assessee had not paid appropriate Service Tax on the said activities undertaken by them. A show cause notice was issued to the assessee demanding service tax from the assessee. The demand made in the show cause notice was confirmed through the adjudicating authority.

The assessee submitted that the demand is based on an artificial formula derived from opening and closing balances of Sundry Debtors, without examination of invoices or identification of any specific taxable service.

The Tribunal noted that the liability of payment of Service Tax on the activity of laying of cables under or alongside roads has been clarified by C.B.E.C. vide Circular No. 123/5/2010‑TRU dated 24.05.2010, wherein it has been categorically clarified that no Service Tax is payable on such service.

The bench opined that the assessee has, in fact, received the entire consideration for the activity of laying of cables under or alongside roads, which has been clarified as an activity not liable to Service Tax vide the C.B.E.C. Circular.

The bench opined that the assessee has been collecting Service Tax from the clients in some cases and paying the Service Tax collected by them to the Department. Even though the said activity undertaken by the assessee is not liable to Service Tax as clarified by C.B.E.C. vide Circular No. 123/5/2010‑TRU, the assessee would not be eligible for a refund of Service Tax paid by them, as they have already collected it from their clients and deposited the same in the government account.

In view of the above, the Tribunal allowed the appeal.

Case Title: M/s. Precision Trenchless Laying Private Limited v. Commissioner of Service Tax-II

Case Number: Service Tax Appeal No. 76555 of 2016

Counsel for Appellant/ Assessee: Shovendu Banerjee

Counsel for Respondent/ Department: R.K. Agarwal

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