2018 (8) TMI 486 - AT - Service Tax

Business Auxiliary Service or Manufacture - supply the steam and electricity to M/s SAIL as per their requirement. Held that - The issue is no more res-integra in view of the decision of the Tribunal in the case of CMS (India) Operations & Maintenance Co. P.Ltd. 2007 (5) TMI 74 - CESTAT, CHENNAI , where it was held that It is a settled position that electricity is goods manufactured in the sense envisaged in clause (f) of Section 2 of the Central Excise Act, 1944 - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Interpretation of service tax liability under Business Auxiliary Service for electricity and steam production.
- Exclusion of electricity generation from the definition of "manufacture" for tax purposes.
- Applicability of previous Tribunal decisions on similar cases.

Analysis:
1. The appeal involved a dispute regarding the service tax liability of a company engaged in electricity and steam production under the category of Business Auxiliary Service. The Revenue challenged the Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Ranchi.

2. The case revolved around the transfer of a power plant by a steel manufacturing company to its subsidiary for electricity and steam production. The Revenue issued a show-cause notice for service tax payment, which was dropped by the Adjudicating Authority based on the argument that electricity and steam production amounted to manufacturing and hence exempt from Business Auxiliary Service tax.

3. The Revenue, represented by the ld.A.R., contested the decision and sought to set aside the impugned order, while the Respondent, represented by the ld.Advocate, argued that electricity generation does not constitute manufacturing and cited relevant statutory provisions and case laws to support their position.

4. The Tribunal, after hearing both sides and examining the records, referred to previous decisions, notably the case of CMS (India) Operations & Maintenance Co. P.Ltd., which clarified that activities involving the manufacture of goods, such as electricity, are not subject to tax under Business Auxiliary Service.

5. The Tribunal also highlighted the decision in the case of NTPC SAIL Power Co.Pvt. Ltd., which supported the view that electricity is considered manufactured goods and therefore excluded from Business Auxiliary Service tax liability.

6. Ultimately, the Tribunal upheld the impugned order based on the precedents set by the aforementioned cases, concluding that electricity generation qualifies as manufacturing and is not liable for service tax under Business Auxiliary Service. As a result, the appeal filed by the Revenue was dismissed, and the decision was sustained in favor of the Respondent.