2020 (2) TMI 1447 - AT - Service Tax

Classification of services - Erection, Commissioning or Installation service or not - services in relation to transmission or distribution of electricity through transmission towers, Lines and Erection, Commission or Installation or various capacity Electrical Sub-stations, Lines, Transformers - HELD THAT - On examination of the contracts awarded by M/s. TNEB and M/s. KSEB to the appellant, it transpires that the scope of work is in connection with transmission and distribution of electricity. In exercise of the powers conferred by Section 11C of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, the Central Government vide Notification No. 45/2010-S.T., dated 20-7-2010 has directed that the service tax payable on transmission and distribution of electricity provided by the service provider, which was not been levied, shall not be required to be paid in respect of the taxable service under the category of Erection, Commissioning or Installation. Non-payment of service tax was provided under the said notification with retrospective effect. Since, the period of dispute involved in this case is from 2004-05 to 2007-08; the benefit of exemption provided under the said notification should be available to the appellant - there are no merits in the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Taxability of services provided by the appellant in relation to transmission and distribution of electricity
- Applicability of retrospective exemption notification on service tax liability
- Interpretation of relevant legal provisions and notifications

Analysis:

1. Taxability of services provided: The appellant was engaged in providing services related to transmission and distribution of electricity through transmission towers, lines, erection, commissioning, installation of electrical substations, lines, and transformers. The department contended that these services fell under the taxable service of Erection, Commissioning, or Installation as per Section 65 of the Finance Act, 1994. The appellant allegedly did not pay service tax for the services provided during 2004-05 to 2007-08, leading to the initiation of show cause proceedings resulting in a demand of service tax, interest, and penalty.

2. Applicability of retrospective exemption: The appellant argued that the services provided during the disputed period were exempted retrospectively up to specific dates in 2010 for transmission and distribution of electricity. Citing Notification No. 45/2010-S.T., the appellant claimed that the demands confirmed against them could not be sustained on merits. The Tribunal examined the contracts with Tamil Nadu Electricity Board and Kerala State Electricity Board and noted that the services were indeed related to transmission and distribution of electricity. Referring to the notification, the Tribunal concluded that the benefit of exemption should apply to the appellant for the period in question.

3. Interpretation of legal provisions: The Tribunal, after considering the arguments from both sides and perusing the records, found that the services provided by the appellant were covered under the retrospective exemption notification. Relying on the powers conferred by relevant sections of the Central Excise Act and the Finance Act, the Tribunal held that the appellant was entitled to the benefit of exemption. Citing previous decisions where similarly placed assessees were granted the benefit, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the judgment by the Appellate Tribunal CESTAT Hyderabad ruled in favor of the appellant, holding that the services provided in relation to transmission and distribution of electricity were entitled to retrospective exemption from service tax liability. The Tribunal emphasized the importance of interpreting relevant notifications and legal provisions to determine the taxability of specific services, ultimately deciding in favor of the appellant based on the retrospective exemption notification and precedents set in similar cases.