January 2012
(2011) 24 STR 387 (Mad.) — Strategic Engineering P. Ltd. v. Additional Commissioner, Central Excise, Madurai.
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Writ jurisdiction — Writ petition not to be rejected for existence of alternative statutory remedy — After the admission of writ petition, the Court should normally hear the case on merits — Article 226 of the Constitution of India.
Whether erection and laying of pipes is liable to service tax under erection, commissioning and installation services or scientific or technical consultancy services.
Facts
The company, a manufacturer of FRP pipes, falling under Chapter No. 7014.00 of the Central Excise Tariff was also in the business of laying GRP pipes for its customers for consideration of labour charges. Order confirming the demand of service tax for the show-cause notice demanding service tax was served on the petitioner under the category of ‘Erection, Commissioning and Installation’ and ‘Scientific or Technical Consultancy services’ for services rendered by the petitioner to its non-resident clients. The writ was admitted without notice to the respondent. However, the Court directed the Revenue to file a counter on merits claimed by the petitioner. The respondent challenged maintainability on the ground of availability of alternate remedy. However, the Court found that subsequent to admission of the writ and filing of counter by the respondent, it was not appropriate to relegate the petitioner to alternate remedy. Further, the question involved in the writ was found purely legal and the Court decided to hear the merits of the case.
Held
The question pertained to whether or not commissioning and installation of pipes was covered by the service tax provisions of section 65(28) of the Finance Act, 1994 at relevant time. It was found that the service of commissioning and installation was redefined by substituting section 65(28) by section 65(39a) with effect from 10-9-2004 and wherein drain laying or other installation for transportation of fluid, etc. were inserted only with effect from 16-6-2005. It was further found that the respondent demanded service tax treating the business as execution of works contract. Since this service came into effect only from 1-6-2007, the demand raised for the period in question was found unsustainable and allowing the petition, the SCN and order were held to be the outcome of misreading of legal provision.
