2012 (10) TMI 104 - AT - Service Tax

Applicability of exemption notification - Assessee is engaged in transmission and distribution of electricity - Whether services provided in respect of erection, commissioning and installation as also technical testing and analyses and installation of meters at the premises of electricity consumers would be covered under the exemption Notification No. 45/2010-ST dated 20.07.2010 - Held that - Assessee is selling electricity to the consumer, so that for billing the consumer for electricity consumed, it is essential to install the electricity meter. Thus, any activity or service like erection, commissioning and installation of meters as also technical testing and analysis can easily be termed as the service relating to the transmission and distribution of electricity provided by the service provider to the service receiver. Therefore appeal decides in favour of assessee.

Summary

Issues:
1. Whether the appellant is liable to pay service tax for services provided beyond transmission of electricity.
2. Whether the appellant qualifies for exemption under Notification No. 45/2010-ST dated 20.07.2010.

Issue 1: Liability for Service Tax on Additional Services Provided

The appellant, engaged in electricity transmission, was alleged to be involved in services like erection, commissioning, installation, and technical testing beyond transmission. The department raised a service tax demand based on income under the head "other income" in their balance sheet. The appellant contested, arguing that the income sources listed under "other income" did not attract service tax. They also challenged the invocation of an extended period for raising the demand. The jurisdictional Commissioner partially dropped the demand but confirmed a service tax demand and imposed penalties. The appellant appealed, contesting the demand and penalties, claiming they were not engaged in activities warranting service tax.

Issue 2: Exemption under Notification No. 45/2010-ST

The crucial issue was whether the services provided by the appellant, such as erection, commissioning, and installation of meters for electricity consumers, qualified for exemption under Notification No. 45/2010-ST dated 20.07.2010. The notification exempted taxable services related to transmission and distribution of electricity from service tax. The Tribunal analyzed the notification and concluded that services like installation of meters were essential for billing consumers for electricity consumed, thus falling under services related to transmission and distribution of electricity. Citing a similar case precedent, the Tribunal held that the appellant's services were covered by the exemption. Consequently, the Department's appeal was dismissed, and the appellant's appeals were allowed, setting aside the confirmed demand and penalties.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the services provided, including erection, commissioning, and installation of meters, were covered under the exemption provided by Notification No. 45/2010-ST. The appellant's contention that they were not liable for service tax beyond electricity transmission was upheld, and the demand and penalties imposed were set aside. The judgment provides clarity on the applicability of service tax exemptions to specific services related to electricity transmission and distribution.