2017 (1) TMI 438 - AT - Service Tax

Whether the appellant M/s Maharashtra State Electricity Distribution Co. Ltd. is liable to be taxed for the services rendered by them to their client in respect of inspection of site material and testing of transformer, stage wise supervision over the line erection and electricity connection, scrutiny of feasibility of customers requirement? Held that - the period is April 2007 to March 2008. There is no dispute that the appellant has rendered services in relation to transmission of electricity and distribution of electricity services to their customers. The Service Tax liability on the services rendered have been exempted by N/N. 45/2010-ST dated 20.07.2010 issued under Section 11C of Central Excise Act, 1944; wherein the Government of India exempted the tax liability on the services which are rendered in relation to transmission and distribution of electricity. In view of Section 11C N/N. 45/2010-ST, demand cannot be made - appeal allowed - decided in favor of assessee.

Summary

Issues:
Whether the appellant is liable to be taxed for services rendered in relation to transmission and distribution of electricity.

Analysis:
The judgment pertains to three appeals against Order-in-Appeal passed by the Commissioner of Central Excise. The main issue is whether the appellant, a state electricity distribution company, is liable to be taxed for services provided to clients, including inspection of site material, testing of transformer, supervision over line erection, and electricity connection, among others. Both lower authorities categorized the activity under "Consulting Engineers." The period in question is April 2007 to March 2008. The appellant's services relate to transmission and distribution of electricity to customers. The Service Tax liability on these services was exempted by Notification No. 45/2010-ST issued under Section 11C of the Central Excise Act, 1944. This notification exempted tax liability on services related to transmission and distribution of electricity. The Tribunal found the impugned orders unsustainable in light of the exemption notification and set them aside, allowing the appeals with consequential relief.

This judgment highlights the importance of statutory exemptions in determining tax liabilities. The Tribunal's analysis focused on the specific exemption provided under Notification No. 45/2010-ST for services related to transmission and distribution of electricity. By invoking this exemption, the Tribunal concluded that the appellant's services were not subject to Service Tax for the period in question. The decision underscores the need for a thorough examination of relevant statutory provisions and notifications to determine the applicability of tax liabilities in specific cases.

The Tribunal's decision to set aside the impugned orders and allow the appeals signifies a clear interpretation of the exemption notification and its impact on the tax liability of the appellant. This outcome provides clarity on the tax treatment of services related to electricity transmission and distribution, ensuring compliance with statutory provisions and avoiding unnecessary tax burdens on entities engaged in such activities. The judgment serves as a precedent for similar cases involving tax liabilities on services exempted under specific notifications, emphasizing the significance of statutory exemptions in tax law interpretation and application.