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TMI Blog2019 (7) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2015 (8) TMI 749 - SUPREME COURT] has held that Works contracts are not liable for service tax for the period prior to 01.06.2007. Also by virtue of Notification No. 45/2010-ST dated 20.7.2010, exemption was granted from payment of service tax to any service in relation to transmission and distribution of electricity - Undoubtedly the services rendered by the Appellant were related to erecting towers for transmission of electricity and hence merits exemption by virtue of subject Notification. During the impugned period, the activity of only commissioning and installation was taxable and only from 10.9.2004, the services of erection were included /adduced to commissioning and installation service so as to make the same taxable. The same is explicit from the CBEC Circular No. 59/8/2003-ST dated 20.6.2003. Demand under Works contract service for the subsequent period - for the subsequent period, the Revenue authorities have themselves classified the service under the category of works contract for the same activity - HELD THAT:- In view of facts of the case, the Hon ble Apex Court order in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 was proposed on the ground that the services provided by the Appellant to their customers should be considered as taxable under the category of Consulting Engineer and the fees / charges for erection, testing and commissioning are to be considered as taxable value. Though the adjudicating authority vide impugned order dated 20.9.2010 held that for the period 1999 to 30.6.2003, the demand under heading Consulting Engineer is not sustainable, however held that the demand of ₹ 8,78,84,996/- of service tax is payable by the Appellant as they have rendered the services of installation of equipment during the period from 1.7.2003 to 9.9.2004, which attracts service tax as per the then prevailing provisions of Finance Act 1994. He also imposed penalty u/s 78 of the Finance Act. Hence present appeal. 2. Ld. Senior Counsel, Shri V. Sridharan along with Counsel Shri Jigar Shah appearing for the Appellant submits that the demand made against the Appellant under the category of commissioning and installation service for the period 1.7.2003 to 9.9.2004 is not sustainable as the activity of erection, commissioning and installation carried out by the appellant is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re beyond the scope of show cause notice as the demand was proposed under the category of Consulting Engineer whereas the same has been confirmed under erection commissioning Services and hence not sustainable. He relies upon the judgments in case of Ballarpur Industries 2007 (215) ELT 489 (SC) and Gas Authority of India Ltd 2008 (232) ELT 7 (SC). 4. Shri Sameer Chitkara, Ld. Additional Commissioner (AR) appearing for the Revenue supports the impugned order and submits that the services are covered under the heading of erection service and hence are liable to service tax and the appellant is also liable for penalty. 5. Heard both the sides and perused the facts of the impugned case. The impugned demands covers the period 1.7.2003 to 9.9.2004. The Appellants during this period were engaged in the erection of transmission towers. The facts of the case show that the Appellant during the relevant period, were engaged in the supply of electricity transmission towers as well as rendering services of erection of the same. Such services would undoubtedlymerit classification under Works Contract Service. From the assessment order passed by the VAT authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the provision. The proviso requires the exempted property to be subjected to tax and for the purpose of valuing that property alone the value of the other properties is to be taken into consideration. But, if in doing so, the said property becomes taxable, the Act does not provide at what rate it would be taxable. One cannot determine the rateable value of the small property by aggregating and adding the value of other properties, and arrive at a figure which is more than possibly the value of the property itself. Moreover, what rate of tax is to be applied to such a property is also not indicated. (at paras 12 and 16) 22 . Equally, this Court in Govind Saran Ganga Saran v. CST, 1985 Supp SCC 205, held :- The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computation provision at all if a certain interpretation is pressed on the charging provision. That pertains to the fundamental integrality of the statutory scheme provided for each head. (at para 10) 24 . A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines taxable service as any service provided . All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has to develop and maintain an efficient, coordinated and economical distribution network within its area of supply. To supply electricity to its consumers a network is first created. The assessee established a distribution network for providing connections to consumers within its jurisdiction. The network involves installation, erection, commissioning of transmission towers and connectors for transmitting energy to various consumers for supply of HT LT electricity and installation of meters to measure consumption of monthly energy. The assessee recovers the charges for these services periodically, an area which is also regulated by law. Revenue initiated proceedings against the assessee for recovery of Service Tax under the taxable head Erection, Commissioning Installation Service , defined in Section 65(39a) read with Section 65(105)(zzb) of the Act. The assessee claimed immunity to tax on the basis of Notification No. 45/2010-S.T., dated 20-7-2010. This notification issued in the exercise of the power conferred by Section 11C of the Central Excise Act, 1944 read with Section 83 of the Act provided that Service Tax payable under all taxable services relating to transmissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Adjudication Authority in relation to the assessee s claim for immunity to Service Tax is predicated on the Notification dated 20-7-2010 vide paragraph 5.1 of the order-in-original under title Discussion and Findings . The Adjudicating Authority held that the notifications do not exempt the activity/service of installation of various equipments at the consumers premises, as this service is different from and in addition to service of distribution of electricity; that equipment installed by the assessee is not in lieu of hire charges; that the infrastructure (established by the assessee) is used to supply electricity to various consumers and the consumers do not have ownership of the transformers. The contention by the assessee that installation of the various equipment, establishing the network is an essential component of his business of distribution of electricity which is carried out in terms of the provisions of the Electricity Act, 2003 was rejected on the ground that all duties required to be delivered by a distribution licensee under provisions of Electricity Act are not exempt from payment of Service Tax. Other contentions were urged on behalf of the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/87075/2018 dated 16.7.2018, CESTAT, Mumbai We also find that during the impugned period, the activity of only commissioning and installation was taxable and only from 10.9.2004, the services of erection were included /adduced to commissioning and installation service so as to make the same taxable. The same is explicit from the CBEC Circular No. 59/8/2003-ST dated 20.6.2003 wherein the Board has viewed as under :- Commissioning and Installation Services : In case of commissioning and installation, it h commissioning and installation as been pointed out that in case of turnkey project, the contract may be indivisible and no separate value could be assigned to commissioning and installation of goods. Doubts have also been raised as to what would be the value of taxable service. It is submitted that it has been provided in law that service tax is leviable on erection and commissioning charges only and not on the material and goods supplied. However, it is upto the service provider to show the break-up of commissioning and installation charges. In case service provider shows consolidated charges, service tax would be leviable on such consol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r function), the same is outside the purview of this taxable service. 3. The taxable status of various activities, on which disputes have arisen : Based on the foregoing, the following would be the tax status of some of the activities in respect which disputes have arisen : S.No. Activity Status 1 Shifting of overhead cables / wires for any reasons such as widenikng / renovating of roads Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 2 Laying of cables under or along wide roads Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 3 Laying of electric cables between grids / sub-stations /transformer stations en route Not a taxable service under any clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial service , the service tax demand confirmed under that category of service will also not be sustainable. 6. We also find that for the subsequent period, the Revenue authorities have themselves classified the service under the category of works contract for the same activity. Thus in view of facts of the case, the Hon ble Apex Court order in Case of Larsen Tubro and Tribunals order as well as CBEC circulars, Notifications issued under Section 11-C of Central Excise Act, we hold that the services of erection rendered by the Appellant during the impugned period are not liable for service tax. We also find that in the show cause notice, the demands were made under the category of Consulting Engineer, whereas in the impugned order, the demands were made under the category of erection services, which amounts to change of classification. Clearly, the demand has travelled beyond the scope of show cause notice as no demands were made under the category of erection service. Our views are based upon the judgment of the Hon ble Apex Court in case of Ballaspur Industries Ltd - 2007 (215) ELT 489 (SC), Gas Authority of India Ltd 2008 (232) ELT 7 (SC) and Gujarat High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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