Arjita Tripathi Vs Commissioner of Central Excise & CGST (CESTAT Allahabad)
Water Supply Services Held Exempt Because They Were Functions Ordinarily Entrusted to Municipalities; CESTAT Allows Appeal Because RO Plant Operations for Nagar Nigam Were Exempt Services; Service Tax Liability Rejected Because Drinking Water Plant Services Fell Under Entry 25 Exemption; Demand Set Aside Because Services to Jal Kal Vibhag Were Connected With Public Water Supply; Extended Limitation Not Invocable Because Department Already Knew Relevant Facts; Service Tax and Penalties Dropped Because Water Supply Operations Were Exempt Municipal Functions; CESTAT Rules Water Plant Maintenance Exempt Because It Related to Municipal Water Supply Duties.
The appeal before the CESTAT Allahabad arose from an Order-in-Appeal dated 29.04.2025 upholding a service tax demand against the appellant for services provided to Jal Kal Vibhag, Nagar Nigam Lucknow and Jal Kal Vibhag, Nagar Nigam Kanpur.
The appellant had entered into contracts for the operation and maintenance of High Quality Treated Drinking Water Plants (RO Plants). Under the contractual arrangements, the appellant installed and commissioned drinking water plants at various locations and operated them for supplying treated drinking water to the public. Potable water and electricity required for operation of the plants were provided free of cost by the respective Nagar Nigams. The appellant received fixed consideration as prescribed in the work orders and contended that the activities constituted public utility services relating to water supply.
