Dam and Powerhouse Construction Not Taxable; CESTAT Directs Refund to be Processed u/s B

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directed a refund in a case involving dam and powerhouse construction, holding that certain services (like manpower and excavation) in respect of construction are not taxable under the given statutory scheme. The tribunal analysed the nature of the activities, whether they fall under taxable “works contract” or non-taxable construction services, and determined that in this instance the department’s demand was not sustainable. CESTAT found that these service components should not be treated as excisable / taxable under the impugned provisions, thereby entitling the appellant to a refund. The decision underscores the importance of correctly classifying service vs works contract, especially in infrastructure projects, and reaffirms that tax authorities cannot demand duty where the legal characterisation of the service does not support it.