By TIOL News Service

MUMBAI, JAN 31, 2019: THE appellants are engaged in providing plumbing services to various builders during the relevant period from 2006-07 to 2012-13.

They claimed that the plumbing work rendered by them at the commercial as well as residential premises for various builders are in the nature of erection, commissioning or installation service, hence they were eligible to the benefit of abatement to the extent of 67% value of the taxable service in accordance with Notification No. 01/2006-ST.

However, the jurisdictional authorities were of the view that the said plumbing services fell under the category of 'Commercial or industrial construction service' and 'Construction of complex service' and were not entitled for the benefit of the said Notification No. 01/2006-ST on the ground that the services rendered by the appellants are in the nature of "completion and finishing services" and which are excluded from the scope of the said notification.

Alleging short payment of service tax, periodical SCNs were issued and confirmed by the adjudicating authority along with interest and penalty.

The appellant is before the CESTAT.

Referring to the exclusion clause in the notification, the appellant submitted that a reading of the meaning of completion and finishing services explained under the definition of "Commercial or Industrial construction" [section 65(25b) of FA, 1994 refers] makes it clear that the same relates to glazing, plastering, painting, floor and wall tiling, wall covering and papering etc. whereas in the present case, the appellant had provided piping system for inlet and outlet of water, rain water harvesting systems, drainage system etc. to the newly constructed building which are essential for getting occupancy certificate for the said premises.

Inasmuch as since laying of the pipeline in the building cannot be considered as finishing work but is essential for construction of the building, hence, the benefit of the Notification No. 01/2006-ST is admissible to them, the appellant emphasized.

The AR reiterated the findings in the impugned order.

The Bench extracted the subject notification 1/2006-ST and observed thus -

++ The central point of dispute is whether the piping system installed in the constructed building by the appellant would be treated as completion and finishing work.

++ Water piping or plumbing service rendered by the appellant to the newly constructed building is part and parcel of the construction of building without which necessary completion certificate to the building would not be issued by the local authorities. In other words, completion of the piping network is mandatory to obtain occupancy certificate of the building.

++ Besides, it is also clear when one reads the meaning and scope of 'completion and finishing service' mentioning the activities which are to be considered as completion and finishing work under the scope of 'Commercial or Industrial construction' and 'Construction of complex service' as defined under Sec.65(25b) and (30a) of the Finance Act, 1994, respectively.

Concluding that 'plumbing service' cannot be considered as 'finishing and completion work' in the sense it is adverted to in the notification number 01/2006 ST dt. 01.3.2006, the CESTAT held that the appellant is entitled for the benefit as claimed under the said notification.

The appeal was allowed to the said extent.

(See 2019-TIOL-357-CESTAT-MUM)