2018 (7) TMI 331 - AT - Service Tax

Classification of services - restoration and reconditioning of various equipments for power stations - Department took the view that the assessee is required to discharge duty liability not only in respect of the services provided by them on their own account but also that provided on behalf of M/s. Quality Engineering - Management, Maintenance or Repair Service - Held that - The services provided by the assessee contended to related to generation, transmission and distribution of power. We then find merit in the plea of the Ld. Counsel that such services would be exempted from tax liability by virtue of N/N. 45/2010-ST - for the limited purpose of verifying whether all these disputed services rendered by the assessee satisfy and fall within the exemption ambit of N/N. 45/2010-ST, the matter is being remanded to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Tax liability on services provided by the appellant and on behalf of another company.
2. Applicability of Notification No. 45/2010-ST for exemption.
3. Penalty imposition and modification.

Analysis:

Issue 1: Tax liability on services provided by the appellant and on behalf of another company
The appellant, engaged in restoration and reconditioning of equipment for power stations, was held liable by the Department to discharge duty not only for services provided directly but also for services rendered on behalf of another company. The adjudication order confirmed a service tax demand of ?14,15,441 along with interest and penalties. In appeal, the Commissioner ordered a requantification of the demand, allowing abatement on material value and modifying penalties and interest based on the final tax liability. Appeals were filed by both parties against the tax liability and penalty modifications.

Issue 2: Applicability of Notification No. 45/2010-ST for exemption
During the hearing, the appellant's counsel argued that the services provided were related to the generation, transmission, and distribution of power, making them eligible for exemption under Notification No. 45/2010-ST. Citing a Tribunal decision in a similar case, the counsel contended that the services fell within the exemption ambit. The Tribunal agreed with the appellant's position, ruling that services related to power generation, transmission, and distribution were exempt from tax liability under the mentioned notification.

Issue 3: Penalty imposition and modification
The Tribunal, while acknowledging the exemption under Notification No. 45/2010-ST for the appellant's services, remanded the matter to the adjudicating authority to verify if the disputed services met the exemption criteria. Considering the prolonged litigation, the penalties imposed on the appellant were set aside. Consequently, the department's appeal was dismissed, and both appeals were disposed of based on the above terms.

This judgment clarifies the tax liability on services provided by the appellant, the applicability of an exemption notification, and the modification of penalties, providing a detailed analysis of each issue and the Tribunal's decision on the matter.