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2019 (7) TMI 520 - AT - Service TaxApplicability of exemption notification - Construction services - services to Ghaziabad Development Authority, U.P. Jal-Nigam and various other Government Authorities - period from 01.04.2009 to 31.03.2014 - HELD THAT - Reliance placed in the case of M/S. SHIV SHANKAR ELECTRICALS AND CONTRACTORS VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, GHAZIABAD 2019 (1) TMI 1593 - CESTAT ALLAHABAD wherein it was decided that taking into consideration the exemption provided through Notification No.45/2010-ST dated 20.07.2010 and Notification No.11/2010-ST dated 27.02.2010, the service tax on construction of electric substation is not sustainable. It is settled by now that construction of electric Substation is also related to transmission of electricity - the demand of service tax of ₹ 64,22,925/- along with equal penalty is set aside. Demand of around ₹ 1.55 lakhs - HELD THAT - The learned Counsel for service provider has submitted that the services were provided to a trust and the same was exempted. However, they are not in position to establish through record that the services were provided to trust and therefore, they are not contesting the service tax and interest but they are contesting penalty on the same - penalty set aside - demand with interest upheld. Appeal allowed in part.
Issues:
- Exemption from payment of service tax for specified services provided to government authorities. - Confirmation of service tax demand and penalty. - Construction of electric substations and imposition of penalty. - Construction of boundary wall and imposition of penalty. - Application of Notification No.25/2012-ST for service tax liability. - Appeal by revenue challenging the dropping of demand. - Appeal by service provider challenging the confirmation of demand and penalty. Exemption from payment of service tax for specified services provided to government authorities: The service provider was engaged in providing various services related to construction and laying of pipelines, drainage, works contract service, and erection commission and installation service to government authorities. The Original Adjudicating Authority examined each work separately for the period before and after 01.07.2012. For the period after 01.07.2012, exemption was granted based on Notification No.25/2012-ST. The demand of around ?18 crores was dropped for services provided to government authorities. The revenue appealed against this decision, but the Tribunal upheld the exemption granted. Confirmation of service tax demand and penalty: A demand of ?65 lakhs was confirmed along with an equal penalty under Section 78 of the Finance Act, 1994. The service provider challenged this confirmation. The Tribunal noted the demand for construction of electric substations and a boundary wall. The demand for construction of electric substations was set aside based on previous tribunal decisions and the exemption provided by Notification No.45/2010-ST. The demand for the boundary wall was upheld due to the lack of evidence showing exemption for services provided to a trust. The penalty for the boundary wall was set aside. Construction of electric substations and imposition of penalty: The demand of ?64,22,925 for construction of electric substations was set aside as it was related to the transmission of electricity, which was covered by the negative list after 01.07.2012. The penalty for this demand was also canceled based on the exemption provided through notifications. The Tribunal ruled in favor of the service provider on this issue. Construction of boundary wall and imposition of penalty: A demand of around ?1.55 lakhs for construction of a boundary wall was confirmed, and an equal penalty was imposed. The service provider failed to establish that services were provided to a trust for exemption. The penalty for this demand was set aside by the Tribunal. Application of Notification No.25/2012-ST for service tax liability: The Original Adjudicating Authority carefully examined each contract and determined the service tax liability for the period before and after 01.07.2012 based on Notification No.25/2012-ST. The Tribunal found no merit in the revenue's appeal challenging this decision. Appeal by revenue challenging the dropping of demand: The revenue appealed against the dropping of the demand of around ?18 crores by the Original Adjudicating Authority. However, the Tribunal upheld the decision to drop the demand based on the exemption granted to specified services provided to government authorities. Appeal by service provider challenging the confirmation of demand and penalty: The service provider challenged the confirmation of the demand of ?65 lakhs and the penalty imposed. The Tribunal set aside the demand for construction of electric substations and a portion of the penalty, ruling in favor of the service provider.
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