2018 (11) TMI 1295 - AT - Service Tax

Works contract service - levy of service tax - erection commissioning or installation service - Held that - The issue involved in the present case is no more res integra and has been settled by the Apex Court in the case of Larsen and Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT wherein the Hon ble Apex Court has held that works contract is taxable only from 01/06/2007 and in the present case the period involved is 16/06/2005 to 31/03/2007 and therefore the service tax cannot e levied on the works contract service which is rendered by the appellant in the present case. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax for the period from 16/06/2005 to 31/03/2007 on contracts executed for electrification work.
2. Whether the appellant is entitled to the benefit of Notification No.45/2010-ST exempting service tax on services related to transmission and distribution of electricity.

Analysis:
Issue 1: Liability for Service Tax
The appellant contended that the contracts executed were works contracts subject to VAT/Sales Tax and not liable to service tax under 'erection, commissioning, or installation service'. Citing legal precedents, the appellant argued that works contracts were chargeable to service tax only from 01/06/2007, which was supported by various decisions in favor of the appellant. The Tribunal found that the issue was settled by the Apex Court in Larsen and Toubro Ltd., holding works contracts taxable only from 01/06/2007. Consequently, the Tribunal held that the service tax could not be levied on the works contract service provided by the appellant during the period in question.

Issue 2: Benefit of Notification No.45/2010-ST
The appellant claimed entitlement to the benefit of Notification No.45/2010-ST, exempting service tax on services related to the transmission and distribution of electricity. The Tribunal referenced a case involving Purvanchal Vidyut Vitran Nigam Ltd., where it was held that the notification exempts services related to transmission and distribution of electricity from the levy of service tax. The Tribunal further noted that activities like erection, commissioning, and installation of meters for electricity consumption fell under the exemption provided by the notification. By following the precedent set by the Apex Court and other relevant cases, the Tribunal concluded that the appellant's case was covered by the exemption notification, and therefore, the impugned order was set aside in favor of the appellant.

In conclusion, the Tribunal allowed the appeal of the appellant, finding that the impugned order was not sustainable in law. The decision was based on the settled legal principles regarding the taxation of works contracts and the benefit of the exemption notification related to services concerning the transmission and distribution of electricity.