2018 (6) TMI 481 - AT - Service Tax

Benefit of N/N. 45/2010- ST dated 20.7.2010 - scope of activity in relation to transmission of electricity - Works contract with MESCOM for repair and reconditioning of faulty distribution transformers of different capacities - Held that - The benefit of exemption of notification appears to be for all taxable services relating to transmission of electricity - there are plethora of judgments, wherein it has been held that erection commissioning and installation comes within the ambit of the expression in relation to . The activity undertaken by the appellants are to be held to fall in the ambit of in relation to transmission of electricity in terms of N/N. 45/2010 dated 20.7.2010 as there is a clear nexus between the service rendered by the appellant and transmission and distribution of electricity - exemption allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Interpretation of Notification No.45/2010-ST dated 20.7.2010 for exemption on taxable services related to transmission and distribution of electricity in works contracts.

Detailed Analysis:

1. Issue of Works Contract with MESCOM:
The appellants entered into works contracts with MESCOM for repair and reconditioning of faulty distribution transformers used for electricity transmission and distribution. They claimed retrospective exemption under Notification No.45/2010-ST dated 20.7.2010. The appellants argued that based on the Hon'ble Supreme Court decision in CCE vs. Larsen & Toubro Ltd., they were not required to pay service tax on the labor portion during the disputed period. They cited various case laws to support their claim.

2. Interpretation of Notification No.45/2010-ST:
The Notification provided exemption on taxable services related to transmission and distribution of electricity till specific dates. The Tribunal examined the scope of the exemption and referred to previous judgments like CCE vs. Sri Rajyalakshmi Cement Products, Hyderabad Power Installations (P) Ltd. vs. CCE, among others, to determine that activities like erection, commissioning, and installation fall within the ambit of "in relation to" transmission of electricity. Based on this interpretation, the Tribunal concluded that the appellants' activities were indeed related to the transmission of electricity, making them eligible for the exemption.

3. Decision and Conclusion:
After considering the arguments and examining the relevant provisions and case laws, the Tribunal held that the exemption under Notification No.45/2010-ST applied to the appellants' works contracts with MESCOM for repair and reconditioning of distribution transformers used in electricity transmission and distribution. Therefore, the appeals were allowed, and the appellants were not required to pay service tax on the services provided. The operative portion of the order was pronounced on 07/06/2018.

This detailed analysis of the judgment highlights the key issues, legal interpretations, and the final decision reached by the Appellate Tribunal CESTAT Bangalore in this case.