2018 (5) TMI 1130 - AT - Service Tax

Demand of service tax - appellant had rendered the services of erection, commissioning and installation work for Andhra Pradesh Transco - whether taxable under the category of erection, commissioning and installation services or otherwise? - Held that - It is seen from the Notification No. 45/2010-ST, exemption is granted to all taxable services relating to transmission and distribution of electricity provided by a person to any other person - the impugned order is unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of services rendered for erection, commissioning, and installation work for Andhra Pradesh Transco.
2. Applicability of service tax liability under construction services.
3. Interpretation of Notification No. 45/2010-ST regarding exemption for services related to transmission and distribution of electricity.

Analysis:
1. The appeal challenged the taxability of services provided by the appellant for erection, commissioning, and installation work for Andhra Pradesh Transco during a specific period. The Lower Authorities deemed these services taxable under the category of erection, commissioning, and installation services, leading to the issuance of a show cause notice demanding service tax, interest, and penalty. The Adjudicating Authority upheld the demands and penalties under the Finance Act, 1944. The appellant contested the show cause notice, citing a Notification issued by the Central Government exempting services related to the transmission and distribution of electricity, which was deemed in public interest. The Tribunal reviewed case laws and found that similar issues had been decided in favor of the appellant, leading to the set aside of the impugned order.

2. The Departmental Representative argued that the appellant, despite registering the activity under "construction services," failed to discharge the service tax liability under this category. It was contended that the entire activity of the appellant during the specified period constituted a composite contract, thereby triggering tax liability under erection, commissioning, and installation services. However, upon specific inquiry, both parties confirmed that the services rendered were indeed related to the transmission and distribution of electricity, aligning with the exemption granted under Notification No. 45/2010-ST. The Tribunal considered this exemption and concluded that the impugned order was unsustainable, leading to its setting aside and allowing the appeal.

3. The interpretation of Notification No. 45/2010-ST was crucial in determining the tax liability of the services provided by the appellant. The notification granted an exemption to all taxable services related to the transmission and distribution of electricity provided by a person to another person until specific dates. The Central Government directed that service tax payable on such taxable services, not levied in accordance with prevailing practices, shall not be required to be paid during the specified periods. In light of this notification and the specific nature of the services provided by the appellant to Andhra Pradesh Transco, the Tribunal found the impugned order unsustainable and set it aside, ultimately allowing the appeal.

(Order dictated & pronounced in open court)