2019 (3) TMI 1231 - AT - Service Tax

Benefit of N/N. 11/2010-ST dated 27.02.2010 - Sub-station cum SDO offices of Electricity Department of Noida having been constructed by the assessee - Held that - Inasmuch admittedly the demand is in respect of the activity of construction of Sub-station or the SDO office for electricity department, it has to be held that the benefit of notification is available to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax on construction activity for electricity department - Applicability of exemption under Notification No. 11/2010-ST dated 27.02.2010.

The judgment by the Appellate Tribunal CESTAT ALLAHABAD dealt with the confirmation of a service tax demand of ?1,67,660 against the appellant for the construction of Sub-station cum SDO offices of the Electricity Department of Noida. The appellant argued that since the construction was done for the electricity department, it should not be taxable as it is not related to commerce or industry. They also claimed exemption under Notification No. 11/2010-ST for services provided for transmission of electricity. The Lower Authorities rejected this plea and confirmed the demand along with interest.

The Tribunal noted that the issue had been settled in various precedent decisions. They referred to a case involving M/s Kedar Constructions where it was held that the exemption under the notification is available if the taxable services are rendered for the transmission of electricity. The definition of transmission covers a wide range of activities, including sub-stations and equipment. Therefore, activities related to transmission or distribution of electricity are eligible for the exemption. The Tribunal cited another decision involving Noida Power Company Ltd., emphasizing that demands related to construction activities for the transmission or distribution of electricity are exempt from service tax.

Given that the demand in question pertained to the construction of Sub-station or SDO office for the electricity department, the Tribunal concluded that the benefit of the notification applied to the appellant. Consequently, the demand was set aside, and the appeal was allowed with consequential relief to the appellant.

In conclusion, the judgment clarified the applicability of the exemption under Notification No. 11/2010-ST for construction activities related to the transmission or distribution of electricity, providing relief to the appellant in this case.