2015 (10) TMI 52 - AT - Service Tax

Waiver of pre-deposit - Recovery of interest and penalty under Sections 76 and 78 - erection, commissioning or installation service - Held that - Notification No. 45/2010-S.T., dated 20-7-2010 has granted immunity from service tax in respect of all services relating to transmission and distribution of electricity provided during the specified period relating to transmission of electricity upto 21-2-2010 and in relation to distribution of electricity upto 21-6-2010. Notification No. 11/2010-S.T., dated 27-2-2010 exempted taxable services provided for transmission of electricity from the whole of the service tax leviable thereon, prospectively. Similarly, Notification No. 32/2010-S.T., dated 22-6-2010 granted exemption to taxable service provided to any person, by a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003, for distribution of electricity, from the whole of service tax leviable thereon, prospectively. - taxable service of erection, commissioning or installation service , when provided in relation to transmission of electricity/electrical energy would be covered by the immunity/exemption, as the case may be. - prima facie case in favour of the petitioner/appellant - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit and stay of further proceedings for realization of tax, interest, and penalties.
2. Interpretation of Notifications No. 45/2010-S.T., 11/2010-S.T., and 32/2010-S.T. regarding service tax liability in relation to transmission and distribution of electricity.
3. Determination of whether the services provided by the petitioner fall under the category of erection, commissioning, or installation service.

Detailed Analysis:
1. The case involved a request for waiver of pre-deposit and stay of further proceedings regarding a substantial service tax demand confirmed by the adjudication order. The petitioner, engaged in activities related to rural electrification programs, was subjected to a service tax demand of a significant amount along with interest and penalties. The primary relief sought was the waiver of pre-deposit and a stay on the realization of the liability pending the appeal process.

2. The Tribunal examined the Memorandum of Understanding (MoU) between Rural Electrification Corporation Ltd. (REC) and the petitioner, which outlined various services to be provided, including consulting engineer services. The petitioner was initially compliant with the service tax liability for consulting engineer services. However, a dispute arose regarding additional services provided by the petitioner to State Governments and State Power Utilities, leading to the imposition of service tax liability under the category of erection, commissioning, or installation service.

3. The petitioner contended that the services provided did not fall under the definition of erection, commissioning, or installation service. Alternatively, the petitioner argued for immunity from service tax liability based on Notifications No. 45/2010-S.T., 11/2010-S.T., and 32/2010-S.T. The Tribunal analyzed previous judgments and interpretations of these notifications, emphasizing that services related to the provision of infrastructure for the transmission of electrical energy were exempt from service tax. Based on this analysis, the Tribunal found a strong prima facie case in favor of the petitioner and granted the waiver of pre-deposit and a stay on further proceedings for the realization of the adjudicated liability.

In conclusion, the Tribunal's judgment focused on the interpretation of relevant notifications to determine the applicability of service tax liability in the context of services provided for the transmission and distribution of electricity. The decision favored the petitioner, granting relief in the form of a waiver of pre-deposit and a stay on further proceedings pending the appeal process.