2014 (5) TMI 1048 - AT - Service Tax

Waiver of pre deposit - benefit of Notification No. 45/2010-S.T. - Held that - installation of distribution system and installation of transformers is in the nature of infrastructure and creation of infrastructure for transmission and distribution are not covered by the Notification. - The notification exempts all taxable services relating to transmission and distribution of electricity provided by a person to any other person. The term relating to transmission and distribution of electricity in our opinion, is wide enough to cover the activities of the appellant. - Appellant s activities are covered by the retrospective exemption Notification No. 45/2010 and therefore the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Summary

Issues: Applicability of Notification No. 45/2010-S.T. for exemption in relation to transmission and distribution of electricity services; denial of benefit of composition scheme for payment of Service Tax on erection, commissioning, and installation services.

Analysis:

1. Benefit of Notification No. 45/2010-S.T.: The dispute in the case revolved around the applicability of Notification No. 45/2010-S.T. for exemption in relation to transmission and distribution of electricity services. The appellant argued that they were eligible for the benefit of this notification, while the AR contended that the benefit would only apply to services directly related to transmission and distribution, excluding activities like installation of transformers. The Tribunal analyzed the text of the Notification and concluded that the term "relating to transmission and distribution of electricity" was broad enough to encompass the activities of the appellant, including installation of distribution systems and transformers. The Tribunal rejected the AR's argument and held that the appellant's activities fell within the scope of the exemption provided by Notification No. 45/2010-S.T.

2. Denial of Composition Scheme Benefit: The appellants were paying Service Tax under a composition scheme treating certain services as works contract services. However, a show cause notice was issued demanding Service Tax under different categories, denying the benefit of the composition scheme, and requiring tax payment on the full value. The Tribunal considered this issue and found that the appellant's activities were covered by the retrospective exemption Notification No. 45/2010. Consequently, the Tribunal waived the requirement of pre-deposit and granted a stay against recovery during the pendency of the appeal. The Tribunal's decision was based on the interpretation of the Notification and the nature of the appellant's services, ultimately ruling in favor of the appellant regarding the denial of the composition scheme benefit.

In conclusion, the judgment by the Appellate Tribunal CESTAT Bangalore centered on the interpretation and application of Notification No. 45/2010-S.T. for exemption in relation to transmission and distribution of electricity services. The Tribunal rejected the arguments against the applicability of the Notification raised by the AR, affirming that the appellant's activities were covered by the exemption. Additionally, the Tribunal addressed the denial of the composition scheme benefit, ruling in favor of the appellant and granting relief during the appeal process.