2018 (8) TMI 361 - AT - Service Tax

Classification of services - formulation of the terms of tenders for execution of works, scrutiny of the bids received pursuant to invitation to tender, scrutiny of the bids and award of contracts on appraisal of the bids and remittances of funds received from REC to the contractors after retaining a commission for channelizing the funds - Whether the services are Erection, commissioning or installation service or otherwise? - N/N. 45/2010-ST dated 20/07/2010. Held that - Identical issue was decided by this Tribunal in the case of M/s M.P. Power Transmission Co. Ltd. Vs Commissioner of Customs, Central Excise, Bhopal 2011 (2) TMI 982 - CESTAT, NEW DELHI , where it was held that Notification No. 11/10-S.T., dated 27th February, 2010 exempts services relating to transmission and distribution of electricity provided by a person (service provider) to any other person (service receiver) from 27-2-2010. Further for the past period upto 26-2-10, Ministry has issued Notification No. 45/2010 dated 20-7-10 exempts such service invoking provision under Section 11C of the Central Excise Act read with Section 83 of the Finance Act, 1994, demand not sustainable. No service tax is payable by the assessee - penalties also set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of demand of service tax, interest, and penalties against the assessee.
2. Imposition of penalties on the assessee.
3. Interpretation of Notifications No.45/2010-ST, No.11/2010-ST, and No.32/2010-ST regarding immunity from service tax in relation to transmission and distribution of electricity.
4. Applicability of exemption for erection, commissioning, or installation services provided in relation to transmission of electricity.
5. Precedent decision regarding the exemption of service tax on transmission and distribution of electricity.

Analysis:
1. The appellate tribunal heard appeals against confirmed demands of service tax, interest, and penalties against the assessee. The case involved agreements between the assessee and Rural Electrification Corporation Ltd. for providing services falling within the taxable category of Consulting Engineer Service. Disputes arose regarding the nature of services provided, including activities related to the transmission and distribution of electricity, leading to adjudication orders.

2. The assessee contended that the services provided did not amount to erection, commissioning, or installation services. Alternatively, the assessee argued for immunity from service tax, interest, and penalties based on specific Notifications (No.45/2010-ST, No.11/2010-ST, No.32/2010-ST) related to the transmission and distribution of electricity. The tribunal examined the wide import of the term "in relation to transmission of electrical energy" and its implications on taxable services provided in connection with infrastructure for transmission of electricity.

3. The tribunal considered the arguments put forth by the Departmental Representative regarding the interpretation of Notifications granting immunity from service tax. Notifications No.45/2010-ST, No.11/2010-ST, and No.32/2010-ST were analyzed to determine the scope of exemption for services provided in relation to transmission and distribution of electricity. The tribunal found that erection, commissioning, or installation services related to the transmission of electricity would be covered by the immunity or exemption provided in the Notifications.

4. Referring to a precedent decision involving M.P. Power Transmission Co. Ltd., the tribunal reiterated that services relating to transmission and distribution of electricity were exempt from service tax as per the relevant Notifications. Following the precedent, the tribunal held that no service tax was payable by the assessee in the present case. Consequently, the impugned orders demanding service tax and imposing penalties were set aside, leading to the dismissal of the revenue's appeal.

5. In conclusion, the tribunal allowed the appeals filed by the assessee and dismissed the appeal filed by the revenue based on the analysis of the Notifications and the precedent decision. The judgment emphasized the exemption and immunity granted under the Notifications for services provided in connection with the transmission and distribution of electricity.