2017 (5) TMI 622 - AT - Service Tax

Commercial or Industrial Construction Services (CICS) - Cargo Handling Services - three contracts in respect of CICS were awarded in their favour where two contracts were with the materials supplied by the client and in the last contract with M.s Om Power Corporation Ltd. the material was in the scope of the appellant - taxability - Held that - all taxable services relating to transmission of electricity during the period upto 26.022.2010 and to distribution of electricity upto 21.06.2010 were exempted retrospectively as per N/N. 45/2010-ST dated 20.07.2010 - similar issue decided by the Tribunal in the case of CCE & C Nashik Vs. S.Z. Dhanwate Engineering Works 2016 (1) TMI 676 - CESTAT MUMBAI where it was held that Central Government had retrospectively exempted all the services rendered to the transmission and distribution of electricity provided for the period 26.02.2010 upto 21.06.2010 - the service tax is not liable in the instant case. Cargo handling services - for the period October 2005 to May 2007 - Board s Circular No.104/7/2008 dated 06.08.2008 - Held that - the appellant is not providing Cargo Handling Service but only GTA service. The recipient is already paying the tax. Therefore there cannot be any liability on Cargo Handling Services. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Service tax demand under Commercial or Industrial Construction Services (CICS) for construction of civil structures in relation to power projects.
2. Service tax demand under Cargo Handling Services (CHS) allegedly provided to a specific company.

Analysis:

Issue 1: Service tax demand under CICS:
The appellant was engaged in construction activities related to power projects during 2005-2007. The department demanded service tax under CICS for three contracts, with varying bases for the demand. The appellant argued against the demand based on a retrospective exemption related to the transmission and distribution of electricity. The Tribunal referred to a notification exempting services related to transmission and distribution of electricity retrospectively. The Tribunal clarified that the exemption applied to such services and not to power generation and supply. The Tribunal upheld that the service tax was not applicable in the appellant's case, following previous judgments supporting this view.

Issue 2: Service tax demand under CHS:
The department demanded service tax under CHS for services provided to a specific company for transporting cement. The appellant contested this demand, citing a circular that clarified the treatment of intermediary and ancillary services in composite services provided by a Goods Transport Agency (GTA). The circular explained that if ancillary services were part of the transportation service and invoiced by the GTA, they should be considered part of the GTA service. The Tribunal referred to previous cases and concluded that the appellant's activity fell under GTA services, not Cargo Handling Services. As the recipient was already paying tax, the liability for Cargo Handling Services did not apply. Therefore, the impugned order was set aside, and the appeal was allowed with consequential reliefs.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, setting aside the service tax demands under CICS and CHS. The judgments were based on the retrospective exemption related to electricity transmission and distribution and the classification of services under GTA instead of Cargo Handling Services, respectively.