2014 (12) TMI 332 - AT - Service Tax

Erection, installation & commissioning service - Penalty u/s 76, 77 & 78 - Held that - Commissioner in this order has confirmed the service tax demand relying upon the Board s Circular No.123/05/2010-TRU dated 24.05.2010 wherein it has been clarified that installation of transfer sub-stations undertaken is taxable under Section 65(115)(zze) as erection, installation or commissioning service . The Commissioner, however, in this order has not considered the notification no.45/2010-ST dated 20.07.2010 issued under Section 83 of the Finance Act read with Section 11C of the Central Excise Act, 1944 Since during the period of dispute upto 21.06.2010, there was a prevailing practice of not charging service tax on the taxable services, relating to distribution of electricity provided by a person, the Central Government by the issue of this notification has directed that in respect of such activity, the service tax would not be chargeable upto 21.06.2010. According to the appellant, their activity is covered by the above notification but the applicability of this notification has not been considered by the Commissioner. In view of this, the Commissioner s order is set aside and the matter is remanded to the Commissioner for de novo adjudication after hearing the appellant - Decided in favour of asssessee.

Summary

Issues:
- Taxability of services provided by the appellant under Section 65(105)(zzd)
- Validity of show cause notice for recovery of service tax
- Adjudication by the Commissioner and penalties imposed
- Consideration of Central Government notification no.45/2010-ST
- Ex parte order by the Commissioner

Analysis:
The judgment revolves around the taxability of services provided by the appellant, focusing on whether the services fall under the definition of 'erection, installation & commissioning service' as per Section 65(105)(zzd). The appellant had contracts with H.P. Electricity Board for setting up transformer stations, leading to a dispute regarding the applicability of service tax. A show cause notice was issued for recovery of allegedly non-paid service tax along with interest and penalties under various sections of the Finance Act, 1994.

The Commissioner of Central Excise, Chandigarh-II adjudicated the show cause notice and confirmed a substantial service tax demand against the appellant, imposing penalties as well. The appellant challenged this order through an appeal, raising concerns about the lack of consideration given to a specific notification issued by the Central Government. The appellant argued that the notification exempted certain taxable services related to transmission and distribution of electricity until a specified date, which should have been taken into account by the Commissioner.

The appellate tribunal, after hearing both sides, noted that the Commissioner's order was ex parte and failed to consider the implications of the Central Government notification no.45/2010-ST. The notification exempted service tax on specific activities related to the distribution of electricity until a certain date due to prevailing practices. As the Commissioner did not assess the appellant's tax liability in light of this notification, the tribunal set aside the order and remanded the matter back to the Commissioner for fresh adjudication after hearing the appellant. The appeal and stay application were disposed of accordingly.