9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 61 - AT - Service TaxExemption from service tax or not - Business Auxiliary Service - Consulting Engineering Service - Renting of Immovable Property Service - Commercial Training or Coaching Service - whether the activities of the appellant relate to transmission and distribution of electricity and are exempted from service tax or not? - interest - penalties - extended period of limitation. HELD THAT - In its judgment in the case of STATE OF HARYANA VERSUS DALMIA DADRI CEMENT LTD. 1987 (11) TMI 94 - SUPREME COURT pertaining to the Sales Tax Act it was held by the Hon ble Apex Court that from a plain reading of the relevant clause it is clear that expression for use means intended for use. Thus the word for appearing in the notifications are to be construed as expressions of width and amplitude which cover within its scope any activity which is rendered in connection with the main activity of transmission and distribution of electricity. While examining a similar phrase the Hon'ble Bombay High Court in the case of OIL AND NATURAL GAS CORPN. LTD. VERSUS CCE, SERVICE TAX AND CUSTOMS 2013 (4) TMI 103 - BOMBAY HIGH COURT has held that - where the legislature or its delegate uses the expression in or in relation to , its object and purpose is to widen the scope and purview of its entitlement - A similar treatment has to be given to the word for in the context of the notifications. It would not suffice to examine the form of the activity sought to be classified in isolation. The guiding factor would be to examine it in conjunction with the real nature and substance of the main activity i.e transmission and distribution. It has hence to be ascertained whether the activity sought to be classified is an essential activity which is having a direct and close nexus with transmission and distribution of electricity. If so, all these services would be eligible for the exemption otherwise not. In the case of M/S S.K. SHAH VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, KOLHAPUR 2019 (2) TMI 1103 - CESTAT MUMBAI it was held that by virtue of Notification No. 45/2010-ST dated 20.7.2010, transmission and distribution of electricity for the period upto February, 2010 has been retrospectively held to be not leviable to Service Tax in exercise of powers conferred by Section 11C of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. Subsequently, the transmission of electricity has been held exempted vide Notification No. 11/2010- ST dated 27.2.2010 and distribution of electricity under Notification No. 32/2010-ST dated 22.6.2010. It would now merit to examine the individual activities sought to be taxed by the department. The description of the activity as given by the appellant is mentioned below. i) Registration / application / name transfer from Wind Energy Generators (WEG) Business Auxiliary Service , Registration fee, name transfer fee and Installation tie up fee are fixed as statutory fee for grant of permission for setting up of a wind mill. ii) Preparation of field feasibility reports etc., to establish wind farms. Consultant Engineer Service . The field feasibility report is prepared for the purpose of installation of wind electric generator. It is a mandatory/ statutory document and helps the appellant to monitor the role of the applicant in its capacity as an electric transmission and distribution utility. Without assessing feasibility and hereafter approving the grid tie up the appellant cannot allow the electricity generated by the WEG to enter the grid. iii) Non-employees for training/workshop. Commercial Coaching and Training . The training given to its own employees is without collecting fees. Training for others is done by collecting a nominal fee for meeting the cost of training. The training is given as a part of human resource development as skill upgradation is essential for providing and maintaining proper transmission and distribution of electricity. iv) Leasing land for power plant. Renting of Immovable Property Service . The vacant land of the appellant was given on lease for setting up diesel engine-based power project having 4 units of 49 MW each. The land has been leased out to optimize the generation, transmission and distribution of electricity. As per the discussions at para 7 and the judgments above it is clear that all taxable services provided for the transmission and distribution of electrical energy are exempt from the liability to service tax during the impugned period. The sole purpose of the impugned activities as described above are for ensuring the transmission and distribution of electricity. These services are not provided independently and are part of the appellant s statutory functions and are hence done for transmission and distribution of electric power to various consumers located within the state of Tamil Nadu in terms of the provisions of the Electricity Act, 2003. Without the said services being rendered transmission and distribution of electricity would be impaired. This being so the activities though being taxable services are covered by the exemption notifications stated above prior to 1.7.2012, and from the said date they figure in the negative list as per Section 66D(k) of the Finance Act 1994. Interest - penalties - extended period of limitation - HELD THAT - Since the issue has been decided on merits in favour of the appellant the question of paying duty, interest, penalties or of invoking the extended period does not arise. Appeal allowed.
Issues Involved:
1. Classification of services under 'Business Auxiliary Service', 'Consulting Engineering Service', 'Renting of Immovable Property Service', and 'Commercial Training or Coaching Service'. 2. Applicability of service tax exemptions for services related to transmission and distribution of electricity. 3. Invocation of the extended period for demand of service tax. 4. Imposition of interest and penalties under various provisions of the Finance Act, 1994. Summary: Issue 1: Classification of Services The appellant, Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO), provided various services including 'Business Auxiliary Service', 'Consulting Engineering Service', 'Renting of Immovable Property Service', and 'Commercial Training or Coaching Service'. Based on intelligence regarding non-payment of service tax on fees collected from wind energy generators, an investigation revealed that the appellant had been collecting fees for processing applications, consultancy charges, training fees, and lease rental income, which appeared to be taxable under the aforementioned service categories. Issue 2: Applicability of Service Tax Exemptions The appellant argued that all services were rendered in connection with the transmission or distribution of electricity, which were exempt from service tax as per various government notifications and Section 66D(k) of the Finance Act, 1994. The Tribunal examined whether the activities of the appellant were essential for the transmission and distribution of electricity and concluded that they were indeed covered by the exemptions. The Tribunal relied on several judicial precedents, including the judgments in Kedar Constructions v. CCE, Shri Ganesh Enterprises v. CCE, and others, which held that services related to transmission and distribution of electricity are exempt from service tax. Issue 3: Invocation of Extended Period The appellant contended that the relevant facts were already known to the authorities when the first Show Cause Notice (SCN) was issued, and hence, the extended period for demand could not be invoked. The Tribunal agreed with the appellant, noting that the activities were part of the statutory functions of the appellant and were covered by the exemptions, thus negating the need for invoking the extended period. Issue 4: Imposition of Interest and Penalties Given that the services were exempt from service tax, the Tribunal held that there was no question of paying duty, interest, or penalties. The Tribunal set aside the impugned orders and allowed the appeals with consequential relief. Conclusion: The Tribunal concluded that the activities of the appellant were essential for the transmission and distribution of electricity and were covered by the service tax exemptions. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief. The appeals were disposed of accordingly.
|
