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2018 (8) TMI 1685 - AT - Service TaxErection Installation & Commissioning service - N/N. 1/2006-ST dated 01.03.2006 - Distribution of electricity or not? - taxability. Held that - Undisputedly in present case the respondents were providing the services under the category of Erection Installation & Commissioning service to Maharashtra State Electricity Distribution Company Limited (MSEDCL) which is a company engaged in distribution of electricity - vide various related notifications issued it is quite evident that all the taxable services provided by any person in relation to the distribution of electricity and the taxable services provided by the distribution company for the distribution of electricity have been exempted from the payment of service tax since inception. The notification No 11/2010-ST and 32/2010-ST have been rescinded by the Notification No 34/2012-ST dated 20.06.2012 and hence service tax in respect of these service tax was payable from the said date. In view of the exemption contained in the notification No 11/2010-ST the taxable services provided by the respondents to the M/s MSEDCL continue to remain exempted. For availing the benefit of the exemption under N/N. 11/2010-ST the service provider need not be a distribution licencee a distribution franchisee or any other person by whatever name called authorized to distribute power under the Electricity Act 2003(36 of 2003). The said conditions are necessary only in case if the exemption was being allowed under notification No 32/2010-ST. Appeal dismissed - decided against Revenue.
Issues:
1. Whether the services provided by the respondents are exempt from service tax under the relevant notifications? 2. Whether the Commissioner's order correctly applied the exemption notifications? 3. Whether the tribunal correctly interpreted the exemption notifications in similar cases? Issue 1: Exemption from Service Tax The respondents provided "Erection Installation & Commissioning" services to MSEDCL, a company engaged in electricity distribution. The exemption Notification 11/2010-ST exempts all services for transmission of electricity. However, services provided by the electricity distribution company are not covered by this exemption. Notification 32/2010-ST exempts services provided by authorized entities for electricity distribution. The exemption was also extended retroactively by Notification 45/2010-ST. The tribunal held that services provided to MSEDCL were exempt under Notification 45/2010-ST until 26.2.2010. Beyond this date, the tribunal applied Notification 11/2010-ST, which did not require the service provider to be an authorized distributor. The tribunal's decision was supported by precedents and upheld the exemption for services provided to MSEDCL. Issue 2: Application of Exemption Notifications The Commissioner's order demanded differential service tax from the respondents, which was partially confirmed. However, the revenue appealed, arguing that the Commissioner erroneously applied the exemption Notification 32/2010-ST. The revenue contended that the respondents were not authorized distributors and thus not eligible for the exemption. The tribunal disagreed, citing the specific language of the notifications and the nature of services provided to MSEDCL. The tribunal found no merit in the revenue's appeal and dismissed it, upholding the exemption for the services provided by the respondents. Issue 3: Tribunal's Interpretation of Exemption Notifications The tribunal referenced previous cases where similar issues were addressed. In cases like Sudarshan Electricals Engineering Works and Kedar Constructions, the tribunal consistently upheld the exemption for services related to electricity distribution under the relevant notifications. The tribunal also cited other decisions supporting their interpretation, such as M.D. Aub Khan, Sri Rajyalakshmi Cement Products, JC Electricals, and MP Power Transmission Co. Ltd. These cases reinforced the tribunal's view that services provided to entities involved in electricity distribution were exempt from service tax. Consequently, the tribunal dismissed the revenue's appeal, affirming the exemption for the respondents' services to MSEDCL. This detailed analysis of the judgment highlights the interpretation and application of the exemption notifications in the context of the services provided by the respondents, ultimately leading to the dismissal of the revenue's appeal.
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