2015 (8) TMI 66 - AT - Service Tax

Erection, Commissioning or Installation Service - Rural Electrification - Exemption under Notification No.32/2010-ST, dated 22.06.2010 read with Notification No.45/2010-ST - Held that - Service tax payable on all services relating to transmission and distribution of electricity provided by the service provider to the service recipient is not required to be paid. We have seen the related contracts entered by the appellant with M/s. UPCL. It is evident from there that the service rendered by the appellant is squarely relating to transmission and distribution of electricity and therefore in the light of the Notification No.45/2010-ST, dated 20.07.2010 no service tax is recoverable in respect thereof. Indeed CESTAT in the case of Noida Power Co. Vs. CCE, Noida 2013 (8) TMI 746 - CESTAT NEW DELHI has held that the expression in relation to is of wide import and indicates all activities having direct and proximate nexus with distribution of electrical energy. Distribution of electrical energy cannot be effectively accomplished without installation of sub-station, transmission towers and installation of meters. Indeed similar demands against M.P. Power Transmission Co, Ltd raised by CCE, Bhopal and Pachimanchal Vidut Vitran Nigam Ltd. Raised by CCE, Meerut were set aside by CESTAT in the cases of M.P. Power Transmission Co. Ltd.. Vs. CCE, Bhopal 2011 (2) TMI 982 - CESTAT, NEW DELHI and Paschimanchal Vidut Vitran Nigam Ltd. Vs. CCE, Meerut- 2012 (8) TMI 688 - CESTAT, NEW DELHI respectively, in the wake of provisions of Notification No,45/2010-ST, dated 20.07.2010. - impugned demand is not sustainable - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of service tax demand under Erection, Commissioning or Installation Service (ECIS) for rural electrification work.
2. Applicability of Notification No.45/2010-ST exempting service tax on services related to transmission and distribution of electricity.

Analysis:
1. The appeal was filed against the confirmation of a service tax demand of Rs. 1,33,95,159/- under ECIS for rural electrification work provided to a power corporation. The appellant had signed a contract for rural electrification work on a turnkey basis, including various services like erection, commissioning, and installation of electrical infrastructure. The adjudicating authority held the service fell under ECIS as per the Finance Act, 1994. However, the appellant argued that the demand was no longer sustainable post the issuance of Notification No.32/2010-ST and Notification No.45/2010-ST.

2. Notification No.45/2010-ST exempted service tax on all services related to transmission and distribution of electricity till specific dates. The Tribunal analyzed the contracts between the parties and found that the services provided by the appellant were directly related to the transmission and distribution of electricity. Citing precedents like the Noida Power Co. case, the Tribunal emphasized the broad interpretation of services "in relation to" distribution of electrical energy. Moreover, similar demands raised against other power transmission companies were set aside by the CESTAT based on the provisions of Notification No.45/2010-ST.

Conclusion:
In light of the analysis, the Tribunal found the impugned demand unsustainable and quashed it, thereby allowing the appeals filed by the appellant. The judgment highlighted the applicability of Notification No.45/2010-ST in exempting service tax on services related to transmission and distribution of electricity, ultimately leading to the decision in favor of the appellant.