Mrs. Archana Wadhwa, Judicial Member - Vide his impugned order, Commissioner of Central Excise Ahmedabad has confirmed service tax of Rs. 1,58,82,314 against the appellant along with confirmation of interest and imposition of penalty of Rs. 1.60 crores, under section 78 of Finance Act, 1994. In addition, penalty of Rs. 200 per day stands imposed in terms of section 76 of Finance Act.

2. As per facts on record, appellant herein M/s. Dinesh Chandra R. Agarwal Infracon Pvt. Limited are registered with Service Tax department under the category of Goods Transport Agency services. However, Revenue received intelligence about the appellants providing taxable service of laying of long distance pipelines for transfer of water in the State of Gujarat. As the appellant was not paying any service tax on the said service, investigations were conducted at their end. It was revealed that the contract for laying long distance pipelines for transfer of water in the State of Gujarat was awarded to them by M/s. Gujarat Water Supply and Sewerage Board (hereinafter referred as ‘GWSSB’), an independent body constituted under the Gujarat Act No. 18 of 1979, which is called as Gujarat Water Supply and Sewerage Board Act, 1978. As the revenue entertained a view that services being provided by the appellant to M/s. GWSSB are covered by the category of "Commercial or Industrial Construction Service", they carried on further investigation to find out the status of GWSSB. Statement of various persons were recorded during the course of investigations and on the basis of which proceedings were initiated against the appellant by way of issuance of show-cause notice dated 10-10-2007 for the period June 2005 to March 2007 for recovery of service tax under the category of Commercial or Industrial Construction Services. The said show-cause notice stands culminated into an impugned order passed by Commissioner.

3. We have heard Shri P.M. Dave, learned advocate appearing for the appellants and Shri Avinash Thete, SDR appearing for the revenue.

4. Service tax on the services relating to "Construction of pipelines and conduits" was introduced with effect from 16-6-2005. The "Commercial or Industrial Construction Service" is defined under section 65(25b) of the Finance Act, 2005 as under :-

"‘Commercial or Industrial Construction Service’ means :

(a)Construction of a new building or a civil structure or a part thereof; or

(b)Construction of pipelines or conduit; or

(c)Completion or finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or

(d)Repair, alteration, renovation of, or similar services in relation to building or civil structure, pipeline or conduit, which is;

(i)used, or to be used, primarily for; or

(ii)occupied, or to be occupied, primarily with; or

(iii)engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams."

Taxable service under this category as per clause (105)(zzq) of section 65 of the Finance Act, 1994 is a service provided or to be provided to any person, by a commercial concern, in relation to commercial or industrial construction service.

5. In view of the above definitions, it is evident that the "Construction of Pipeline or Conduit" is a taxable service subject to the following conditions :-

(i)such "Pipelines or Conduit" are used, or to be used, primarily for commerce or industry;

(ii)the service provider shall be a commercial concern.

6. Commissioner in his impugned order has observed that the service provided i.e., appellant who constructed the pipelines is admittedly a commercial concern. As such, he has observed as to w