The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax on ‘manpower recruitment or supply agency’ services for setting-up of Koldam Hydropower Station On Satluj River.
The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the alleged services rendered by the appellant were related, bundled and undertaken in course of construction, repair, maintenance etc of the same dam i.e. cofferdam at KOLDAM which were specifically exempted by name up to 30.06.2012 vide Notification No. 17/2005-ST dated 07.06.2005.
National Thermal Power Corporation Limited (NTPC) entered into an agreement with M/s Italian Thai Development Public Company Limited (ITD) for construction of Hydro Electric Power Project on Satluj river referred to as KOLDAM.
As per the agreement, the work of “Main Civil Works Package-I – Dam, Spillway and Power Intake Package” was awarded to M/s ITD. The scope of work also included such items which were not specifically mentioned in the Contract Documents but which are reasonably implied for the satisfactory completion of the entire scope of work envisaged under this contract unless otherwise specifically excluded from the scope in the letter of acceptance.
M/s ITD further entered into another agreement with the appellant for excavation of clay, loading, transportation and unloading at dam site also referred in some documents as sub- contract „for clay extraction and hauling from Naulakha and Kanaid Clay Borrow‟; and supply of manpower for cleaning and caulking work at dam under KOLDAM Project.
As per the said agreement, the appellant would excavate and load clay/aggregate material from designated borrows and unload at coffer dam site and then spread the same.
With the aid of machinery and labour, clay/aggregate material was compressed layer upon layer for form earthfilled/corefilled dam. Further, the appellant was also granted work order for cleaning and caulking work at dam, spillway, galleries etc.
The department alleged that the appellant has rendered taxable services under the scope of “manpower recruitment or supply agency‟ and “site formation and clearance excavation and earthmoving and demolition‟ services, for which the appellant did not obtain service tax registration and did not deposit the due service tax liability thereon in government exchequer.
The Commissioner (Appeals) has also held that the extraction and transportation of clay for the main dam does not involve transfer of property in goods which is leviable to VAT/Sales Tax. Similarly, providing of labour for cleaning and caulking work at main dam also does not involve transfer of property in goods which is leviable to VAT/Sales Tax.
The tribunal has held that the services were provided to M/s NTPC which is a governmental authority and were exempted from levy of service tax. M/s NTPC is a public sector undertaking under the ownership of the Ministry of Power and is under control of the Government of India and is engaged in generation of electricity.
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Case Details
Case Title: M/s Austees Hydro Power & Construction Co Pvt Ltd Versus Commissioner of Central Excise and Central Goods & Service Tax, Shimla
Case No.: Service Tax Appeal No. 61088 of 2019
Date: 07.01.2025
Counsel For Appellant: A. S. Gill
Counsel For Respondent: Anurag Kumar
