2016 (2) TMI 471 - AT - Service Tax

Taxability of supervision charges collected from the consumer of electricity in outride contribution scheme in relation to power supply. - appellant submits that the services are related to supply and distribution of electricity to the consumer. This services have been exempted from retrospective effect for the period upto 21st June 2010 vide Notification No. 45/2010-ST dated 20/7/2010 issued under Section 11(C) of Central Excise Act, 1944 therefore demand does not sustain. Held that - As per the facts of the present case it is undisputed that so called consulting engineer Service is provided in relation to supply and distribution of electricity to the consumer, therefore in our considered view the service in question is also covered under the exemption notification No. 45/2010-ST dated 20/7/2010. - Demand set aside - Decided in favor of assessee.

Summary

Issues:
- Whether the services provided by the appellant fall under Consulting Engineering Services category?
- Whether the demand of service tax proposed in the Show Cause Notice is sustainable?
- Whether the penalty imposed under Section 76 should be upheld?
- Whether the services provided by the appellant are exempted from service tax under Notification No. 45/2010-ST?
- Whether the judgments cited by the appellant are applicable to the present case?

Analysis:
1. The appeal was against an order where the demand of service tax was upheld, but the penalty under Section 76 was dropped. The appellant, Maharashtra State Electricity Board, was alleged to be collecting supervision charges in relation to power supply, categorized as Consulting Engineering Services. The Commissioner (Appeals) confirmed the demand but dropped the penalty.

2. The appellant argued that the services were related to the supply and distribution of electricity, exempted from retrospective effect up to June 21, 2010, under Notification No. 45/2010-ST. Citing judgments like M.P. Power Transmission Co. Ltd. and Purvanchal Vidyut Vitran Nigam Ltd., the appellant contended that the demand did not sustain.

3. The Revenue contended that the services provided were not covered under the exemption notification, emphasizing that only the transmission and distribution of electricity were exempted. The Tribunal analyzed the notification and found that all taxable services related to transmission and distribution of electricity were exempted, including consulting engineering services in the present case.

4. Referring to the judgments cited, the Tribunal noted that similar services were considered exempt under the relevant notifications. Quoting the judgments, the Tribunal highlighted that services related to transmission and distribution of electricity were exempt from service tax. Based on the settled legal position, the Tribunal set aside the impugned order and allowed the appeal of the appellant.