Author: Khushi J Prajapati
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chandigarh, delivered a judgment affirming that hydroelectric projects cannot be separated from dams for service tax exemption.
The Appellate Tribunal in its final order addressed the issue of whether the services provided by M/s Golden Earthmovers, involving excavation work for a Hydro Electric Project, were eligible for exemption under Notification No. 17/2005 dated 07.06.2005.
The Tribunal observed that the services rendered by the respondents fell under the taxable categories of site formation, clearance, excavation, and earthmoving. However, the core issue was whether these services, which were part of a Hydro Electric Project, could be considered as related to the construction of a dam and thus exempt from service tax.
The Tribunal relied on previous case law, notably the decisions in M/s C.P. Systems Pvt. Ltd. and Continental Construction Ltd., to support its findings. It was concluded that the construction of a Hydro hydroelectric project inherently includes elements such as dams and tunnels, which are integral to the project’s completion.
The bench held that services rendered for a Hydro Electric Project should be seen as services related to the construction of dams, which are exempted from service tax under Notification No. 17/2005.
The Tribunal rejected the Revenue’s argument that Hydro Electric Projects and dams are separate entities and upheld the Adjudicating Authority’s decision in favor of the respondents.
FACTS
M/s Golden Earthmovers excavation services for a Hydro Electric Project before the Customs Excise and Service Tax Appellate Tribunal Chandigarh. These services were necessary for building a hydroelectric project including site formation clearance excavation and earthmoving.
The Revenue Department then questioned these services’ eligibility for exemption under Notification No 17/2005 of June 7, 2005, which excludes in its scope construction works on dams.
The crux of the dispute was whether or not the services offered by M/s Golden Earth Movers were an integral part of a Hydro Electric Project and could also be connected with a dam building project enough to get tax exemption as it ought to do so since dam construction and hydropower development are two separate but interrelated undertakings.
Thus came an appeal that challenged the judgment of the Adjudicating Authority which had given his or her support for such exemptions for those plaintiffs.
Case Details
Case name: The Commissioner of Service Tax, Delhi v/s M/s Golden Earthmovers
Case Number: Service Tax Appeal No. 57087 of 2013
Tribunal: Customs, Excise & Service Tax Appellate Tribunal, Chandigarh
Judges: Hon’ble Mr. S. S. Garg, Member (Judicial) Hon’ble Mr. P. Anjani Kumar, Member (Technical)
Date of Judgment: 31.07.2024
Appeal in favor of Respondent
