Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
(Tax Research Unit)
Circular No.123/5/2010-TRU
New Delhi dated the 24th May 2010.
To
The Chief Commissioners of Central Excise and Service Tax (All),
The Director General (Service Tax),
The Director General (Central Excise Intelligence),
The Director General (Audit),
The Commissioners of Service Tax (All).
Madam/Sir,
Subject: Applicability of service tax on laying of cables under or alongside
roads and similar activities – clarification regarding.
Disputes have arisen in some parts of the country regarding applicability of
service tax on certain activities such as shifting of overhead cables to
underground on account of renovation/widening of roads; laying of electrical
cables under or alongside roads/railway tracks; between
grids/sub-stations/transformers the distribution points of residential or
commercial complexes and such activities as electrification of railways,
installation of street-lights, traffic lights, flood-lights. This clarification
takes into account the taxability of different activities taking into account
the scope of all services (such as site formation/excavation/ earth moving
service, commercial or industrial construction services; erection, commissioning
or installation services; or works-contract service) that are presently taxable
as well as those which are covered under the Finance Act, 2010.
2. Scope of certain taxable services in brief;
(i)) ‘Commercial or industrial construction services’, in brief, cover
construction of and the completion, finishing, repair, alteration, renovation,
restoration or similar activities pertaining to buildings, civil structures,
pipelines or conduits. Therefore, only such electrical works that are parts of
(or which result in emergence of a fixture of) buildings, civil structures,
pipelines or conduits, are covered under the definition of this taxable service.
Further, such activities undertaken in respect of roads, railways, transport
terminals, bridges, tunnels and dams are outside the scope of levy of service
tax under this taxable service.
(ii) Under ‘Erection, commissioning or installation services’, the activities
relevant to the instant issue are (a) the erection, commissioning and
installation of plant, machinery, equipment or structures; and (b) the
installation of electrical and electronic devices, including wiring or fitting
there for. Thus, if an activity does not result in emergence of an erected,
installed and commissioned plant, machinery, equipment or structure or does not
result in installation of an electrical or electronic device (i.e. a machine or
equipment that uses electricity to perform some other function) the same is
outside the purview of this taxable service.
(iii) ‘Works Contract’ incorporates the inclusions and exclusions of the
aforementioned two taxable services (amongst others) and it is the nature of the
contract (i.e. a contract wherein the transfer of property in goods involved is
leviable to a tax as sale of goods) rather than the nature of activities
undertaken, that distinguishes it from the previously stated taxable services.
Thus, even in the case of ‘works contract’ if the nature of the activities is
such that they are excluded from aforesaid two services then they would
generally remain excluded from this taxable service as well.
(iv) ‘site formation and clearance, excavation, earthmoving and demolition
services’ are attracted only if the service providers provide these services
independently and not as part of a complete work such as laying of cables under
the road
3. The taxable status of various activities, on which disputes have arisen
Based on the foregoing, the following would be the tax status of some of the
activities in respect of which disputes have arisen,-
| S.No. |
Activity |
Status |
| 1. |
Shifting of overhead cables/wires for any reasons such as widening/renovation of
roads |
Not a taxable service under any clause of sub-section (105) of section 65 of the
Finance Act, 1994 |
| 2. |
Laying of cables under or alongside roads |
Not a taxable service under any clause of sub-section (105) of section 65 of the
Finance Act, 1994 |
| 3. |
Laying of electric cables between grids/sub-stations/transformer stations en
route |
Not a taxable service under any clause of sub-section (105) of section 65 of the
Finance Act, 1994 |
| 4. |
Installation of transformer/ sub-stations undertaken independently
|
Taxable service, namely Erection, commissioning or installation services
[section 65 (105] (zzd]. |
| 5. |
Laying of electric cables up to distribution point of residential or commercial
localities/complexes |
Not a taxable service under any clause of sub-section (105) of section 65 of the
Finance Act, 1994 |
| 6. |
Laying of electric cables beyond the distribution point of residential or
commercial localities/complexes. |
Taxable service, namely commercial or industrial construction’ or ‘construction
of complex’ service [section 65(105) (zzq)/(zzzh)], as the case may be. |
| 7. |
Installation of street lights, traffic lights flood lights, or other electrical
and electronic appliances/devices or providing electric connections to them
|
Taxable service, namely Erection, commissioning or installation services
[section 65 (105] (zzd]. |
| 8. |
Railway electrification, electrification along the railway track
|
Not a taxable service under any clause of sub-section (105) of section 65 of the
Finance Act, 1994 |
4. The conclusions drawn above are essentially general in nature and would have
to be applied in an individual case depending upon its facts and circumstances.
The pending disputes /cases may be decided based on the clarifications contained
in this circular.
5. Please acknowledge receipt.
6. Hindi version follows.
(Gautam Bhattacharya)
Joint Secretary (TRU-II)
Tel: 23093027; Fax: 23093037
F.No.332/5/2010-TRU