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TMI Blog2025 (3) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... r for holding that the services provided by the appellant are "work contract service", it is found that while granting the benefit of exemption under this notification, the bench was not seized with the matter wherein the service recipients were other than government organizations or local authority. As such on this ground this order of Chandigarh Bench is distinguishable. While keeping the demand higher granted the benefit that was available to the appellant with regards to 50% liability to be discharged by the appellant and 50% by the service recipient on reverse charge basis, has been granted and demand has been restricted only to 50% of the amount, there are merits in the said findings recorded by the adjudicated authority. Extended period of limitation - HELD THAT:- It is a fact on record that even after repeated inquiries appellant failed to provide the requisite details what was called for. They were also not registered, nor were filing service tax returns, during the relevant period it is only on the basis of enquiry and investigation made that case of none payment of service tax has been made out by way of none declaration and separation of facts. Accordingly, extended p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndred and Eighteen Only), upon M/s M.K.S. Enterprises, Chakpadauna, Gopiganj, S.R.N. Bhadohi 221303 (U.P.) under the provisions of Section 78 of the Finance Act, 1994. The party shall be eligible for reduced penalty specified in second and third proviso of Section 78 of the Act, subject to fulfillment of conditions specified therein." 2.1 Appellant-assessee is registered with the department for providing Maintenance or repair Service. 2.2 Certain discrepancies were noticed during reconciliation of service tax return and tax paid by the appellant with data available with the department in the form of profit and loss account, Form 26AS for the period 2012-13. 2.3 Inquiries were made from the party and letters dated 15.09.2014, 27.01.2015 and 16.03.2015 were send to the appellant to provide the copies of contract/work orders, as the documents indicates that appellant was engaged in providing services to M/s U.P. Power Corporation Ltd. (UPPCL) and M/s Purvanchal Vidyut Vitran Nigam Ltd. (PVVNL). Appellant had not submitted the details, however, vide their letter only admitted that they have not deposited any tax during the period 2012-13. They have also submitted a copy of le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon them under Section 77(1)(a) of Chapter V of the Finance Act, 1994 for contravention of section 69 of the Act readwith Rule 4 of the Rules for obtaining delayed registration. (c) Penalty should not be imposed upon them under Section 77(2) of Chapter V of the Finance Act, 1994 for contravention of section 70 of the Act read with Rule 7 for each default for not filing the statutory return ST-3 within due time and for contravention of Rule 5 & 6 of the Rules. (d) Penalty should not be imposed upon them under Section 78 of Chapter V of the Finance Act, 1994 for not paying service tax in accordance with the provisions of Section 66, 666, 67, 68, 69 and of Chapter V of the Finance Act, 1994, Rule 4, 6 of the Service Tax Rules 1994 and Rules of Service Tax (Determination of Value) Rules, 2006 and for their willful mis-declaration and suppression of facts with intent to evade payment of duty." 2.6 The said show cause notice was adjudicated as per the impugned Order-in-Original referred in para 1 above. 2.7 Aggrieved appellant have filed this appeal. 2.8 Revenue has also filed appeal against dropping of demand for the services provided by the party to PVVNL and UPPCL during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on their part, contested the allegation mainly on the ground that they have provided works contract service" to various divisions of UPPCL, and PVVNL. The scope of work provided by the noticee as a Contractor is for execution of (1) Shifting of overhead cables/wires for any reason such as widening/renovation of roads; (II) Laying of cables under or overhead or alongside roads; (iii) Laying of Electric cables between grids/sub-stations/transformer stations in route; (iv) Laying of electric cables upto distribution points of residential or commercial locality/complexes; and (v) Supervision and maintenance of sub-stations. Prior to 01.07.2012, the services relating to transmission and distribution of Electricity were exempt from payment of Service Tax as per provisions of Notification No. 11/2010-ST dated 27.02.2010 and Notification No. 32/2010-ST dated 22.06.2010. The transmission and distribution of electricity were exempted from payment of Service Tax with retrospective effect vide Notification No. 45/2010-ST dated 20.07.2010. W.e.f. service tax in respect of said services was payable under partial reverse charge in terms of Sl.No.9 of Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , PVVNL, Bhadohi 7. 160/EDC(M)/10-11 dt.7.8.10 Operation of 33/11 KV sub- station at Carpet City, Bhadohi 387000.00 SE, PVVNL, Mirzapur 8. 165/EDC(M)/10-11 dt.7.8.10 Maintenance of 11KV feeder at Ramnagar 186000.00 SE, PVVNL, Mirzapur 9. 166/EDC(M)/10-11 dt.7.8.10 Maintenance of 11KV feeder at Nibi Chowk 186000.00 SE, UPPCL, Mirzapur 10. 291/EDC(M)/1011 dt.8.12.10 Maintenance of 11KV feeder at Mamhar 407400.00 SE, UPPCL, Mirzapur 8.1 From the above mentioned contracts, it is observed that the contracts have been issued by the Superintending Engineer, Purvanchal Vidyut Vitaran Nigam Ltd. and the Superintending Engineer, UPPCL for erection, fixing wiring, construction, installation, charging, commissioning, shifting etc. and relocation of electrical lines/poles, towers, transformers, crossing lines etc. 8.2 Now the question arises whether the activity performed by the party, as mentioned hereinabove and relied upon in the SCN, shall be classified as "management, maintenance or repair service" or "works contract service" for the purpose of levy of service tax. The said question needs to be examined in light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether prefabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or airconditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects; 8.6 For ascertaining the correct category of service rendered by the party, it is necessary to examine in detail the exact work executed by the party. From details of the work orders/ work agreements entered into between the party and the service recipient, as illustrated in the chart above, 1 find that the party were specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as 'the said Finance Act'), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided to any person, by a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003 (36 of 2003), for distribution of electricity, from the whole of service tax leviable thereon under section 66 of the said Finance Act. 8.10 Notification No. 45/2010-S.T., cated 20-7-2010 seeks to grant exemption to all taxable services relating to transmission of electricity till 26-2-2010 and distribution of electricity till 21-6-2010. The said notification reads as under: Whereas, the Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), under section 66 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as 'the Finance Act'), on all taxable services relating to transmission and distribution of electricity provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clarification takes into account the taxability of different activities taking into account the scope of all services (such as site formation/excavation/ earth. moving service, commercial or industrial construction services; erection, commissioning or installation services; or works-contract service) that are presently taxable as well as those which are covered under the Finance Act, 2010. 2. Scope of certain taxable services in brief; (i) 'Commercial or industrial construction services', in brief, cover construction of and the completion, finishing, repair, alteration, renovation, restoration or similar activities pertaining to buildings, civil structures, pipelines or conduits Therefore, only such electrical works that are parts of (or which result in emergence of a fixture of) buildings, civil structures, pipelines or conduits, are covered under the definition of this taxable service. Further, such activities undertaken in respect of roads, railways, transport terminals, bridges, tunnels and dams are outside the scope of levy of service tax under this taxable service. (ii) Under 'Erection, commissioning or installation services', the activities releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Laying of electric cables up to distribution point of residential or commercial localities/ complexes Not a taxable service under any clause of subsection (105) of section 65 of the Finance Act, 1994. 6. Laying of electric cables beyond the distribution residential or point of commercial localities/complexes. Taxable commercial service, or namely industrial construction' or 'construction of complex' service (section 65(105)(zzq)/(zzzh)], as the case may be. 7. Installation of street lights, traffic lights flood lights, or other electrical and electronic appliances/devices or providing electric connections to them Taxable service, namely Erection, commissioning or installation services (section 65(105)(zzd)). 8. Railway electrification, electrification along the railway track. Not a taxable service under any clause of subsection (105) of section 65 of the Finance Act, 1994. 4. The conclusions drawn above are essentially general in nature and would have to be applied in an individual case depending upon its facts and circumstances. The pending disputes/cases may be decided based on the clarifications contained in this circular. 8.13 In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.07.2012 to 31.03.2013, the period during which service tax was leviable under "works contract service, an amount of Rs. 5,11,12,972.00 relates to services provided to PVVNL and UPPCL during the period prior to 01.07.2012 but the payments were received after 01.07.2012. The said receipts may be excluded for the purpose of computation of demand. (ii) that in respect of the gross receipts for the period 2013-14, an amount of Rs. 7,93,00,718.00 relates to services provided to PVVNL and UPPCL during the period prior to 01.07.2012 but the payments were received during 2013-14. All the said receipts may be excluded for the purpose of computation of demand. The party have submitted certificates issued by the Executive Engineer, Electricity Distribution Division, Bhadohi, certifying the details of payments received by the party after July, 2012 to 2013-14 in respect of the job/ work done/ completed before 01.07.2012. 10.1 I now proceed to examine the party's contentions made hereinabove, as with regard to taxability in respect of amounts received after 01.07.2012 in lieu of service provided prior to 01.07.2012. I have already held that the service provided by the party to PU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eadwith Notification No. 30/2012-ST dt.20.06.2012, partial reverse charge of 50% equally on the service provider as well as the service receiver was imposed in respect of the works contract service. It has been stipulated that for the purpose of payment of service tax on execution of a work contract, the service provider and the service receiver shall share 50-50 percent liability. Thus, I find that in the instant case, the noticee party being a proprietorship firm, were liable to pay only 50% of the gross service tax liability in respect of the works contracts executed by them after 01.07.2012. The remaining liability shall be borne by the service receiver ie. PVVNL, and UPPCL who are al business entity registered as body corporate. I hold that since this mechanism has been statutorily provided in the statute, the liability of the service receiver cannot be fastened on the service provider. In view of the provisions contained in Notification No. 30/2012-ST (supra), I hold that the party are liable to pay service tax amounting to Rs. 29,52,418/- in respect of the "works contract service" provided by the party to M/s.Purvanchal Vidyut Vitaran Nigam Ltd. and M/s. UP Power Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice. 12.0 As regards issue with regard to charging of interest on the service tax amounts being confirmed, I find that Section 75 of the Finance Act, 1994 provides that every person, liable to pay the tax in accordance with the provisions of section 63 or rules made there under, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at such rate not below ten per cent and not exceeding thirty-six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, for the period by which such crediting of tax or any part thereof is delayed. I find that the Hon'ble Bombay High Court (DB) in the case of CCE vs. Padmashri VV Patil SSK Ltd. reported, in 2007 (215) ELT 23 (Bom.-HC-DB) held that- Interest is civil liability of assessee who has retained amount of public money. Interest is mandatory, even if evasion of duty is not mala fide or intentional...... The CESTAT in the case of Sree Vadivambigai Textile Mills Ltd vs. CCE [2005] 1 STT 72 (Chen.- CESTAT) held that levy of interest under section 75 is mandatory and no leniency can be sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short-levied or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent. of the amount of such service tax: Provided that in respect of the cases where the details relating to such transactions are recorded in the specified records for the period beginning with the 8th April, 2011 upto the date on which the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent. of the service tax so determined: Provided further that where service tax and interest is paid within a period of thirty days of -(0) the date of service of notice under the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen per cent. of such service tax and proceedings in respect of such service tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of cause (29A) of article 366 of the Constitution, or (iii) a transaction in money or action able claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. C. As per Section 65 B (51) of the Act, "taxable service" means any service on which service tax is leviable under section 66B of the Act. Further, section 66B of the Act states that 'there shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Thus all "services", including declared services under Section 66E but excluding those specified in negative list under Section 66D of the Act, are leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es relating to transmission and distribution of electricity provided by a person to any other person and though all such services were liable to Service Tax under the Act. In this appeal Distribution of electricity is the demonstrated business of the assessee. Under Notification No. 32/2010-S.T., dated 22-6-2010 [issued in exercise of powers conferred under Section 93(i) of the Act] the Central Government has exempted the taxable service provided to any person, by a distribution licensee, a distribution franchisee, or any other person authorized to distribute power under the Electricity Act, 2003, for distribution of electricity, from the whole of the Service Tax leviable thereon under Section 66 of the Act. This exemption Notification applied prospectively, from the date of its publication in the official Gazette. The Gazette publication was on 22-6-2010. The exemption was issued as a policy choice, to exempt distribution of electricity, a taxable service from the liability to Service Tax, in larger public interest. Since the exemption notification dated 22-6-2010 was prospective, the period prior to 22-6-2010 was covered by issuing Notification No. 45/2010-S.T., dated 20-7-2010, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption for periodic billing and recovery of charges. 6. In M.P. Power Transmission Co. Ltd. v. CCE, Bhopal - 2011 (24) S.T.R. 67 (Tri.-Del.) Revenue demand of Service Tax on transmission and distribution of electricity was declared unsustainable in view of Notification No. 45/2010, dated 20-7-2010. Again in Paschimanchal Vidyut Vitran Nigam Ltd. v. CCE, Meerut - 2012-TIOL-1175-CESTAT-DEL = 2012 (28) S.T.R. 412 (Tri.-Del) after analyzing the provision of Notification No. 45/2010-S.T., dated 20-72010 it was held that for the purpose of billing the consumer for electricity consumed it is essential to install the electricity meter having capacity to withstand the load provided to the customer; any activity or service like erection, commissioning and installation of transmission towers and meters as also technical testing and analysis would constitute the activity of transmission and distribution by the service provider to the service receiver; and such service would be squarely covered under exemption provided under this notification. The earlier decision in M.P. Power Transmission Co. Ltd. was affirmed. ii. In the case of M/s Kedar Constructions 2015 (37) STR 631 (Tri.-Mum.) by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emands confirmed are upheld along with interest." iii. In the case of M/s UP Rajkiya Nirman Nigam Ltd. 2016 (41) STR 967 (Tri.-Del.) by holding as follows:- "4. We have considered the contentions of the appellant. Notification No. 45/2010-S.T., dated 20-7-2010 reads as under : - "Electricity - Exemption to all taxable services relating to transmission of electricity till 26-2-2010 and distribution of electricity till 21-6-2010 Whereas, the Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), under Section 66 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as 'the Finance Act'), on all taxable services relating to transmission and distribution of electricity provided by a person (hereinafter called 'the service provider') to any other person (hereinafter called 'the service receiver'), and that all such services were liable to service tax under the said Finance Act, which were not being levied according to the said practice during the period up to 26th day of February, 2010 for all taxable services relating to transmission of electricity, and the period up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied during the period up to 26-2-2010, and, for the period up to 21-6-2010 for all taxable services relating to distribution of electricity. Thus, after 21-6-2010, any such services provided relating to distribution of electricity would be taxable at applicable rates unless they have been further exempted by any Notification issued in that regard. 6.2 The appellant has provided services to APSPDCL, which is a power distribution company. The Notification No. 11/2010-S.T., dated 27-2-2010 relied upon by the appellant extends exemption only to taxable services provided relating to transmission of electricity w.e.f. 27-2-2010. It is only on this ground that the original authority as well as lower appellate authority have denied the exemption benefit on the services provided by them from 27-2-2010 onwards. Hence, reliance on said notifications by ld. Advocate will not help the case of the appellant. 6.3. Nonetheless, it is seen that the Government had subsequently issued another Notification No. 32/2010-S.T., dated 22-6-2010, which reads as under :- New Delhi 22nd June, 2010 Notification No. 32/2010-Service Tax "GSR (E) In exercise of the powers conferred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the services is Works Contract as per the decision of Hon'ble Apex Court in the case of Larsen & Toubro (supra) wherein the Hon'ble Apex Court held that any service provided along with material falls under the category of Works Contract, therefore, prior to 01.07.2012, the service tax liability is not sustainable against the appellant under the category Services.)" 4.7 Appellant has claimed that they have provided these services under the license from a transmission company and hence these services are exempt from payment of service tax. A Copy of the license is reproduced below:- 4.8 From perusal of the above license it is evident that said license is for the appellant to act as a contractor for providing services to various clients of the PVVNL and UPPCL. The clients of PVVNL an d UPPCL are neither any government organization or local government authority. Thus the services provided by the appellant to these service recipients cannot be said to be provided by to government organization or local authority to be eligible for the exemption under Notification no 25/2012-ST as claimed by the appellant. Accordingly, the claim of the appellant that their services will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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