2023 (11) TMI 14 - AT - Service Tax

Taxability of GTA Services on Reverse Charge basis received by TNEB, Mettur - invocation of extended period for demand of Service Tax - imposition of penalties - HELD THAT - M/s. TNEB is engaged in generation and distribution of electricity and all the Services relating to generation or distribution are exempted in terms of Notification No. 11/2010-ST dated 27.02.2010 and Notification No. 45/2010-ST dated 20.07.2010. In terms of the above Notifications, all taxable services relating to transmission and distribution of electricity are exempted. It is an admitted fact that GTA services have been availed by the appellant for transportation of Line materials and Tower parts to various distribution circles. In the case of KEC International Ltd. Vs. Commissioner of CGST (CESTAT Chandigarh) 2022 (8) TMI 992 - CESTAT CHANDIGARH , has opined that the expression relating to is very wide in its amplitude and its scope and such taxable service rendered in relation to transmission / distribution of electricity would be eligible for the benefit of exemption under Notification dated 20.07.2010 and 27.02.2010 - in the case of M/S KEDAR CONSTRUCTIONS VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR 2014 (11) TMI 336 - CESTAT MUMBAI it was held that the expression for would cover a wide gamut of activities and the activities undertaken by the appellant would be eligible for the benefit of the Notification as was held by the Tribunal in Noida Power Company Limited. Considering the decision and as GTA Services were availed for transport of Line materials and Tower parts which are related to transmission of electricity are eligible for the benefit of the exemption Notification No. 11/2010-ST dated 27.02.2010 and also Notification No. 45/2010-ST dated 20.07.2010. As the Service Tax demanded is meagre and also major portion of the Service Tax paid before the issuance of the Show Cause Notice, the issue should have been settled as the Revenue has realized the entire tax. Demand of the tax again from TNEB would tantamount to double taxation which is not legally permissible. Various decisions of the judicial fora have laid down the principle that double taxation for the same service activity is not in accordance with law. Extended period of limitation - HELD THAT - All the services relating to transmission of generation of electricity are exempted including by Notification No. 11/2010-ST dated 27.02.2010 and also Notification No. 45/2010-ST dated 20.07.2010 making the intention of the Government very clear regarding charging of Service Tax from the entities involved in generation or transmission of electricity. As the issue is of interpretational in nature, invoking the extended period is not justified. As the entire Service Tax demanded has been paid to the credit of Government account, the impugned order is not sustainable and accordingly set aside - appeal allowed.

Summary

Issues Involved:
1. Taxability of GTA Services on Reverse Charge basis received by TNEB, Mettur.
2. Invocation of extended period for demand of Service Tax and imposition of penalties.

Summary:

1. Taxability of GTA Services on Reverse Charge basis received by TNEB, Mettur:

The appellant, Tamil Nadu Electricity Board (TNEB), Mettur, engaged transport services from two contractors for transporting Line materials and Tower parts. The Department found the appellant liable for Service Tax under Section 65(50b) of the Finance Act, 1994, read with Rule 2(1)(d)(v) of Service Tax Rules, 1994, as the appellant is a company registered under the Companies Act, 1956. The appellant argued that the entire amount of Service Tax demanded had been paid by the transport contractors before and shortly after the issuance of the Show Cause Notice. They cited exemption Notifications No. 11/2010-ST and No. 45/2010-ST, which exempt services related to transmission and distribution of electricity from Service Tax. The Tribunal referred to various decisions, including KEC International Ltd. and Paschimanchal Vidyut Vitran Nigam Ltd., which supported the appellant's contention that services related to transmission and distribution of electricity are exempt.

2. Invocation of extended period for demand of Service Tax and imposition of penalties:

The appellant contended that the extended period for demand and penalties was not justified as there was no violation of the Finance Act, 1994, and the entire Service Tax had been paid. The Tribunal noted that major portions of the Service Tax were paid before the issuance of the Show Cause Notice, and the remaining amount was paid within two months after the notice. The Tribunal also observed that the services availed were related to transmission of electricity, which are exempt under the aforementioned notifications. The Tribunal held that invoking the extended period was not justified as the issue was interpretational in nature and the intention of the Government was clear regarding the exemption for entities involved in the generation or transmission of electricity.

Conclusion:

The Tribunal concluded that the impugned Order-in-Appeal No. 132/2014-ST dated 15.05.2014 was not sustainable as the entire Service Tax demanded had been paid and the services availed were exempt. The appeal was allowed with consequential relief, if any. The order was pronounced in open court on 30.10.2023.