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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 ..... the proviso to Sub-Section (1) of Section 73 read with Section 73 (2) of Chapter V of the Finance Act, 1994 alongwith appropriate interest under Section 75 of the Act. Ibid. Since the party have placed before me two GAR-7 challans dated 23.03.2015 evidencing payment of service tax amounting to Rs. 162077/- and 46216/-respectively, I appropriate the said deposits against the demand confirmed herein. (ii) I also impose a penalty of Rs. 10,000/- (Rupees Ten Thousand Only), upon M/s M.K:S. Enterprises, Chakpadauna, Gopiganj, S.R.N. Bhadohi-221303 (U.P.) under the provisions of Section 77(1) of the Finance Act, 1994, for having contravened the provisions of Section 69 of the Act read. with Rule 4 of the Rules. (iii) I also impose a penalty of Rs. 10,000/- (Rupees Ten Thousand Only), upon M/s M.K.S. Enterprises, Chokpadauna, Gopiganj, S.R.N. Bhadohi 221303 (U.P.) under the provisions of Section 77(2) of the Finance Act, 1994, for having contravened the provisions of Section 70 of the Act read with Rule 7 of the Rules. (iv) I also impose a penalty of Rs. 29,52,418/- (Rupees Twenty Nine Lakhs Fifty Two Thousand Four Hundred and Eighteen Only), upon M/s M.K.S. Enterprises, Chakpad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kant Tripathi, Advocate (authorized person of party) was recorded on 01.09.2015. On the basis of inquiries and investigations made it appeared that appellant has short paid service tax as detailed in table bellow:- Sl. No Period Value of taxable service Rate of (Rs) Rate of service tax Service Tax payable (Rs) 1 2010-11 1,30,19,761/- 10.30% 13,41,035/- 2 2011-12 2,43,92,756/- 10.30% 25,12,454/- 3 2012-13 5,37 32,982/- 12.36% 66,41,397/- 4 2013-14 12,44,54,467/- 12.36% 1,53,82,572/- Total 21,55,99,966/- 2,58,77,457/- 2.9 Demand Cum Show Cause notice dated 23.09.2015 was issued to the appellant asking them to show cause as to why- "(a) Service Tax amounting to Rs.2,58,77,457/- (Rupees Two crore fifty eight lacs seventy seven thousand four hundred and fifty seven only), including Education Cess and Secondary and Higher Education Cess, should not be demanded and recovered from them under the provisions of proviso to Section 73 (1) of Chapter V of the Finance Act, 1994 along with interest as applicable under Section 75 of the Act, ibid. b) Penalty should not be imposed upon them under Section 77(1)(a) of Chapter V of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract has provided maintenance & repair service to UPPCL & PVVNL by way of maintaining and repairing old H.T/L.T lines, replacement of PCC poles and conductors as well as maintenance of electricity feeders at different places. Prior to 01.07.2012, the service provided by the party appeared to be covered under maintenance and repair service, whereas for the period from 01.07.2012, the party failed to submit any evidence that the service provided by them, involved material on which VAT was paid or payable. Therefore, for the period from 01.07.2012, in the absence of fulfillment of condition, the service provided by the party cannot be termed as works contract service', as defined under section 658(54) of the Act and appeared to be a taxable service as per section 65B(51) of the Act. Therefore, for the period prior to 01.07.2012, the service provided by the party appeared to be classifiable under 'maintenance & repair service', as defined under clause (zzg) of section 65(105) of the Act whereas w.e.f 01.07.2012, the same appeared to be a taxable service, as per section 65B(51) of the Act. 6.3 The party have on their part, contested the allegation mainly on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which have been referred to and relied upon as RUD 4 in the impugned SCN. The same is illustrated as under: S. No Contract No. & Date Description of Job Contract Amount (Rs.) Contractee/ Service Receiver 1. 268/EDD(M)/08-09 Shifting & Erection of electric poles by digging trench, grouting at Kazipur, Bhadohi 121875.00 EE, PVVNL, Bhadohi 2. 269/EDD(M)/08-09 Shifting & Erection of electric poles by digging trench, grouting at Azimullah Crossing, Bhadohi 129330.00 EE, PVVNL, Bhadohi 269/EDD(M)/08-09 Replacement & re-laying of new 11KV XLPE cable at 33/11 KV sub-station at Magahar 135200.00 EE, PVVNL, Bhadohi 4. 269/EDD(M)/08-09 Replacement & re-laying of new 11KV XLPE cable at 33/11 KV sub-station at Magahar to Girdbadgaon 145450.00 EE, PVVNL, Bhadohi 5. 270/EDD(M)/08-09 Erection of 12 PCC poles, 20 nos. insulators, 900 m. HT line at Jiyanpur, Jhowa & Mukundpur villages 129990.00 EE, PVVNL, Bhadohi 6. 272/EDD(M)/08-09 Replacement & re-laying of new 11KV XLPE cable at 33/11 KV sub-station at Pakari Railway crossing 136510.00 EE, PVVNL, Bhadohi 7. 160/EDC(M)/10-11 dt.7.8.10 Ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous process whereas repairing may be incidental or ancillary Further, the term 'Immovable property Includes roads, airports, railways, buildings, parks, electrical installations. Further, as per Sec.65 clause 105 sub clause (zzg) the taxable service means service rendered by any person in relation to management, maintenance or repair. 8.5 WORKS CONTRACT SERVICE Section 65(105)(zzzza) of the Act defines the 'Works Contract Service' w.e.f (01.06.2007) as follows: "taxable service" means any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. For the purposes of this sub-clause, "works contract means a contract wherein, - transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and such contract is for the purposes of carrying out, - (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of electrical a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05)(zzzza) of the Act. However, if State "works contract tax WCT" has not been charged or deducted in respect of a particular contract, the same shall not be classified as "works contract service" under the Finance Act, 1994, is not true. State Vat laws operate under separate set of exemptions. 8.8 Notwithstanding the above, Notification No. 11/2010S.T., dated 27-2-2010, seeks to grant exemption to services provided for transmission of electricity. The said notification reads as under: In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the 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 any other person for transmission of electricity, from the whole of service tax leviable thereon under section 66 of the said Finance Act. 8.9 Notification No. 32/2010-S.T., dated 22-6-2010 seeks to grant exemption to taxable service provided for distribution of electricity. The said notification reads as under: In exercise of the powers conferred by sub-section (1) of section 93 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribution". Section 2 (74) of the Electricity Act, 2003, defines-"transmission means conveyance of electricity by means of transmission lines and the expression transmission shall be construed accordingly." Section 2 (70) of the Electricity Act, 2003, defines "distribution means supply in relation to electricity and means the sale of electricity to a licensee or consumer". 8.12 Furthermore, CBEC vide Circular No. 123/5/2010TRU, dated 24-5-2010, Issued under F.No. 332/5/2010 TRU regarding applicability of Service tax on laying of cables under or alongside roads and similar activities wherein it has been clarified by the Board that- "Disputes have arisen in some parts of the country regarding applicability of service tax on certain activities such as shifting of overhead cables to underground on account of renovation/widening of roads, laying of electrical cables under or alongside roads/railway tracks; between grids/sub-stations/transformers the distribution points of residential or commercial complexes and such activities as electrification of railways, installation of street-lights, traffic lights, flood-lights. This clarification takes into account the taxability of differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices are attracted only if the service providers provide these services independently and not as part of a complete work such as laying of cables under the road. 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 wires for any reasons such as widening/renovation of roads cables/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 alongside roads Not a taxable service under any clause of subsection (105) of section 65 of the Finance Act, 1994. 3. Laying of electric cables between grids/substations/ transformer stations en route Not a taxable service under any clause of subsection (105) of section 65 of the Finance Act, 1994. 4. Installation of transformer/substations undertaken independently Taxable service, namely Erection, commissioning or installation services (section 65(105)(zzd)). 5. Laying of electric cables up to distribution point of res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out by person for another for consideration, and includes a declared service, Also, clause (h) of section 66E specifies service portion in execution of works contract as a 'Declared Service. 9.2 On examination of the scope and nature work undertaken by the party with regard to supply, erection, fixing wiring, construction, installation charging, commissioning, shifting etc. and relocation of electrical lines/poles, towers, transformers, crossing lines etc, as illustrated in the chart above, I find that such service provided by the party shall be classified under the "works contract service". Therefore, for the period after 01.07.2012, the service tax liability of the party shall be determined in light of the provisions, as existed after 01.07.2012. I hold that the service tax liability of the party for the period after 01.07.2012 needs to be re-computed. 10.0 With regard to the computation of their service tax liability under 'works contract service' for the period 01.07.2012 to 31.03.2013 and 2013-14, the party have made submissions that: (i) that in respect of the gross receipts for the period 01.07.2012 to 31.03.2013, the period during which service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.07.2012, I hold that the said amounts shall not be included in the eventual demand. 10.3 In view of the above, I hold that the service tax liability of the party for the period 01.07.2012 needs to be re-computed as under: Period Gross amount received towards providing works contract service (Rs.) Deduction of amounts received after 01.07.2012 in respect of job done prior to 01.07.2012 (Rs.) Net Taxable Value received towards providing works contract service excluding Rent (Rs.) Rate of Service Tax (%) Service Tax Payable (Rs.) 01.07.2012to 31.03.2013 53732982 51112972 2620010 12.36 323833 2013-14 124454467 79300718 45153749 12.36 5581003 TOTAL 178187449 130413690 47773759 5904836 10.4 From the above chart, it is observed that the party, during the period 01.07.2012 to 31.03.2014, have provided "works contract service" valued at Rs. 4,77,73,759/- on which service tax amounting to Rs. 59,04,836/- is payable. However, it is also pertinent to mention herein that w.e.f. 01.07.2012, vide provisions contained in 2 (1) (d) (i) (F) (c) readwith Notification No. 30/2012-ST dt.20.06.2012, partial rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CESTAT, in the case of M/s. Ideal Security Vs. CCE, Allahabad [2011 (23) STR 66], while examining identical issues, as involved in the instant case, interalia held: 9. We do agree with the Id. Appellate Authority in the matter of the discrepancy noticed by him in respect of the considerations received and appearing in different manner in two different statutory documents. While the ST 3 return was statutory document under Finance Act, 1994, the balance-sheet and profit and loss account were statutory documents under Companies Act, 1956. Therefore, when the public documents bring the discrepancy, the onus of proof was on the assessee to come out with clean hand to prove its stand. When we did not find any merit on the part of appellant, we agree with Id. appellate authority that invoking Section 73 is appropriate. So far as the valuation aspect is concerned, whether the statutory dues which form part of gross value of the service shall be included or excluded is not a prescription of law. But the consideration that shall contribute to render the services shall essentially form part of the gross value of the taxable service. 12.0 As regards issue with regard to charging of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76 of the Act. 13.1 I also find that in the present case, the party has contravened the provisions of Section 69 of the Act read with Rule 4 of the Rules in as much as they have not obtained appropriate service tax registration during the relevant period in the manner and time prescribed and are thus liable for imposition of penalty under Section 75A of the Act readwith Section 77 of the Act, ibid. 13.2 Furthermore, I find that in the present case the party has contravened the provisions of Section 70 of the Act read with Rule 7 of the Rules in as much as they have not filed statutory ST-3 Returns in the manner and time prescribed under the law and are thus liable for imposition of penalty under Section 77 (2) of the Act. 13.3. As regards issue with regard to the proposal of imposition of penalty on the party under Section 78 of the Act for contravening various provisions of the Act and/or Rules made thereunder, the provisions of Section 78 of the Finance Act, 1994 stipulate that -Penalty for failure to pay service tax for reasons of fraud, etc. (1) Where any service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this section, the provisions of section 76 shall not apply." 4.3 The legal provisions as they existed during the period of dispute are reproduced below: A Prior to 01.07.2012, Section 65(64) of the Finance Act, 1994 defined the management, maintenance or repair" to mean any service provided by- (i) any person under a contract in an agreement; or (ii) a manufacturer or any person authorized by him, in relation to,- (a) management of properties, whether immovable or not, (b) maintenance or repair of properties, whether immovable or not; or (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicle; Also, sub clause (zzg) of Section 65(105) define the "taxable service" as any service provided or to be provided to any person, by any person in relation to management, maintenance or repair. B. W.e.f 01.07.2012, section 65B (44) of the Act defined "service" to mean any activity carried out by a person for another for consideration, and Includes a declared service, but shall not include- (a) an activity which constitutes merely,-- (i) a transfer of title in goods or immovable property, by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 transmission and distribution of electricity provided by the service provider to the service receiver, which was not being levied in accordance with the said practice, shall not be required to be paid in respect of the said taxable service relating to the transmission of electricity during the period till 26-22010 and in respect of all taxable services relating to distribution of electricity provided by persons till 22-62010. The preamble to this notification states that a practice was generally prevalent regarding levy of Service Tax (including non-levy thereof), under Section 66 of the Finance Act, 1994 in respect of taxable services relating to transmission and distribution of electricity pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 were also rejected by the Adjudicating Authority. 5. On true and fair analysis of the Exemption Notification dated 22-6-2010 and the immunity Notification dated 207-2010, the conclusion is compelling that all taxable services provided in relation to distribution of electrical energy are exempt from the liability to Service Tax. The expression "in relation to" is of wide import and indicates all activities having a direct and proximal nexus with distribution of electrical energy. Distribution of electricity energy cannot be effectively accomplished without installation of sub-stations, transmission towers and installation of meters to record electricity consumption for periodic billing and recovery of charges. 6. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of transmission (given in the Electricity Act, 2003), it covers a very wide gamut of activities including sub-station and equipments. Therefore, the various activities undertaken by the appellant, though classifiable under Commercial or Industrial Construction prior to 1-62007 or under works contract service on or after 1-6-2007, would be eligible for the benefit of exemption as held by this Tribunal in the case of Noida Power Co. Ltd., Pashchimanchal Vidyut Vitran Nigam, Purvanchal Vidyut Vitran Nigam and Shri Ganesh Enterprises cited supra. Therefore, the confirmation of Service Tax demand in respect of the construction, maintenance or repair activities undertaken by the appellant so far as it relates to the transmission/distribution of electricity cannot be sustained in law. As regards the other demands which has been confirmed in respect of construction of transformer station for the sugar factory or GTA service etc. the appellant is not disputing the tax liability and therefore, in respect of the other activities of the appellant which are not related to either transmission or distribution of electricity, the demands confirmed are upheld along with interest." iii. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof. Indeed CESTAT in the case of NOIDA Power Co. v. CCE, NOIDA [2014 (33) S.T.R. 383 (Tri.-Del.)] has beld that "the expression 'in relation to' is of wide import and indicates all activities having a direct and proximate nexus with distribution of electrical energy. Distribution of electrical energy cannot be effectively accomplished without installation of sub-station, transmission towers and installation of meters." Indeed similar demands against M.P. Power Transmission Co. Ltd. raised by CCE, Bhopal and Paschimanchal Vidut Vitran Nigam Ltd. raised by CCE, Meerut were set aside by CESTAT in the cases of M.P. Power Transmission Co. Ltd. v. CCE, Bhopal [2011 (24) S.T.R. 67 (Tri.-Del.)] and Paschimanchal Vidyut Vitran Nigam Ltd. v. CCE, Meerut [2012-TIOL-1175-CESTAT-DEL] respectively, in the wake of provisions of Notification No. 45/2010-S.T., dated 20-7-2010." iv. In the case of M/s N. Srinivasula Reddy [2017 (4) GSTL 26 (Tri.-Hyd.)] following has been held:- "6.1 Notification No. 45/2010-S.T., dated 20-7-2010 decreed that all taxable services relating to transmission of electricity shall not be levied during the period up to 26-2-2010, and, for the period up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that from this date the scheme of taxation has been changed and services provided are taxable unless and until exempted or covered by the negative list of services. In the present case, Commissioner has after due analysis, concluded that the services provided by the appellant do not fall either under the category of exempted services or under negative list. As appellant is engaged in providing the services along with the supply of material, undisputedly the services are covered under the category of Work Contract Services and/or liable to pay service tax in this category. 4.6 Similar views have been expressed by the Tribunal in the case of M/s Arvindra Electricals Final Order No.62732/2018 dated 31.08.2018 by holding as follows:- "5. Heard the parties and considered the submissions. On careful consideration of the submissions made by both sides, we find that in this case, demand is sought to be confirmed under the category of 'Erection, Commissioning and Installation Services'. It is fact on record that the appellant has provided the services in question along with material. Therefore, the classification of the services is Works Contract as per the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2012. Hence, order of Commissioner for period post to 01.07.2012 cannot be faulted with. 4.11 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, we also find merits in the said findings recorded by the adjudicated authority. On the issue of limitation also, Commissioner has categorically recorded his findings. 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 period of limitation for making this demand has been rightly invoked. 4.12 To the above extent, we uphold the demand of tax by invoking the extended period of demand along with interest under section 75. 4.13 For various points leadin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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