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2018 (4) TMI 615 - AT - Service TaxVoluntary Compliance Encouragement scheme - rejection on the ground that audit inquiry was going on therefore the goods is not qualified for VCES Scheme - benefit of N/N. 45/2010-S.T. dt. 20..7.2010 - services provided to Maharashtra State Electricity Distribution Service Ltd. which is a Electricity Distribution Company - Held that - the appellant has provided the service of erection, installation and commissioning undisputedly to M/s. Maharashtra State Electricity Distribution Company Ltd. that is involved in distribution of electricity, therefore the service provided by the appellant is in relation to the distribution of electricity. Hence the same is covered by exemption N/N. 45/2010-ST which is effective upto 26.2.2010 therefore the demand upto 26.2.2010 is set aside. As regard the demand for the period 27.2.2010 onwards there was no analogues notification existing for the service in relation to the distribution of electricity. The appellant have admittedly paid the service tax which was eclared under VCES even though the VCES was rejected. There was no dispute that the audit was undergoing of the appellant s records, therefore the issue of non-payment of service tax on the services in relation to the distribution of electricity was with the audit. Therefore the appellant was not eligible for the immunity provided under VCES Scheme - VCES declaration rightly rejected. Appeal allowed in part.
Issues:
1. Applicability of service tax on services provided to Maharashtra State Electricity Distribution Company Ltd. 2. Interpretation of exemption notifications related to distribution of electricity. 3. Validity of VCES declaration and rejection. Analysis: Issue 1: Applicability of service tax The appellant provided services of erection, installation, and commissioning to the Maharashtra State Electricity Distribution Company Ltd. The Revenue demanded service tax for the period 2007-08 to 2011-12. The appellant argued that the service in relation to the distribution of electricity is exempted as per Notification No. 45/2010-S.T. up to a certain date. The Tribunal found that the services provided by the appellant were indeed in relation to the distribution of electricity, thus covered by the exemption notification. The demand up to the specified date was set aside, while the demand from a later date was upheld. Issue 2: Interpretation of exemption notifications The appellant relied on various judgments to support their argument regarding the exemption notification and lack of malafide intention. The Tribunal considered the notifications and the nature of services provided by the appellant to determine the applicability of the exemption. It was established that the services were covered by the exemption up to a certain date, leading to the setting aside of the demand for that period. Issue 3: Validity of VCES declaration The appellant's VCES declaration was rejected on the grounds of an ongoing audit inquiry. The appellant contended that no audit was pending before a certain date and thus, their case should not be affected by Section 106(2)(b) of the Service Tax Voluntary Compliance Encouragement Scheme, 2013. However, the Revenue argued that the audit issue was under consideration before the specified date, justifying the rejection of the VCES declaration. The Tribunal upheld the rejection of the VCES declaration, as the audit was ongoing, making the appellant ineligible for the scheme's immunity. In conclusion, the Tribunal set aside penalties imposed on the appellant due to confusion regarding the taxability of services related to electricity distribution. The judgments provided by the appellant were considered, but the Tribunal upheld the rejection of the VCES declaration due to the ongoing audit issue. The appeal related to the rejection of the VCES declaration was dismissed, affirming the lower authorities' decision.
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