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Laying pipelines under irrigation projects not "erection, commissioning & installation service" pre-2007

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  • CESTAT rules that laying of pipelines for lift irrigation system would fall under “Commercial or Industrial Construction Service” category prior to June 2007, not taxable as “Erection, Commissioning & Installation Service” u/s 65(39a) of Finance Act;
  • Noting that contract awarded was in the nature of turnkey project, CESTAT applies Larger Bench ratio in Lanco Infratech Ltd to observe that same resulted in erection of structure, installation of pumping machinery, electrical switchyard and other related civil, mechanical and electrical structures; In that case, Larger Bench had held that irrigation projects would get covered under CICS prior to June 2007, but eligible for exemption;
  • Also finds the issue squarely covered by SC decision in Larsen & Toubro Ltd, where it was held that any charge to tax u/s 65(105)(g), (zzd), (zzh), (zzq) and (zzh) would only be “of service contracts simpliciter and not composite indivisible works contracts”; Also allows assessee to raise contention that such activity would fall under the ambit of “works contract service”, thereby rejecting Revenue’s objection that same was never putforth before lower authorities : Mumbai CESTAT
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