AI Structured Summary
Not yet generated for this judgment
Judgment
The appeal has been filed against the Order-in-Original No 18/Comm./MRT-1/2009, dated 12.05.2009 in terms of which service tax demand of
Rs.1,33,95,159/- was confirmed along with interest and penalties under Erection, Commissioning or Installation Service (ECIS) provided to M/s.
Uttranchal Power Corporation Ltd. (UPCL).
The appellant signed a contract dated 12.01.2006 with UPCL to undertake the assignment work of rural electrification within the state of
Uttranchal under Rajeev Gandhi Grameen Vidyutikaran Vojna on turnkey basis for a sum of Rs.37,22,20,407/-. The scope of work under the said
contract included ""complete rural electrification as per UPCL/REC (Rural Electrification Corporation) Constructions/erection manuals, design given in
the tender document, manufacture, testing and supply of all the required material on and for destination/site basis including transportation, insurance,
storage, erection, dismantlement, testing and commissioning of 11 kv lines, LT lines erection testing and commissioning of distribution transformers at
single source responsibility on turnkey basis"". The above sum was inclusive of excise duty, sales tax, WCT, etc. The adjudicating authority after
discussing the definition of ECIS as given in Section 65(39a) of the Finance Act, 1994 held that the service rendered was covered under ECIS and
confirmed the impugned demand along with interest and penalties.
The appellant has contended that the said demand is no longer sustainable in the wake of Notification No.32/2010-ST, dated 22.06.2010 read with
Notification No.45/2010-ST.
We have considered the contentions of the appellant. Notification No.45/2010-ST, dated 20.07.2010 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 to 21st day of June, 2010 for all taxable services relating to distribution of electricity,
Now, therefore, in exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944), read with section 83 of the
said Finance Act, the Central Government hereby directs that the service tax payable on said 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 services relating to transmission and distribution of electricity during
the aforesaid period.
[Notification No. 45/2010-S.T., dated 20-7-2010]
Thus, the service tax payable on all services relating to transmission and distribution of electricity provided by the service provider to the service
recipient is not required to be paid. We have seen the related contracts entered by the appellant with M/s. UPCL. It is evident from there that the
service rendered by the appellant is squarely relating to transmission and distribution of electricity and therefore in the light of the Notification
No.45/2010-ST, dated 20.07.2010 no service tax is recoverable in respect thereof. Indeed CESTAT in the case of Noida Power Co. Vs. CCE, Noida
[2014 (33) STR 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
Pachimanchal Vidut Vitran Nigam Ltd. Raised by CCE, Meerut were set aside by CESTAT in the cases of M.P. Power Transmission Co. Ltd.. Vs.
CCE, Bhopal [2011 (24) STR 67 (Tri.-Del.)] and Paschimanchal Vidut Vitran Nigam Ltd. Vs. CCE, Meerut [2012-TIOL-1175-CESTAT-DEL]
respectively, in the wake of provisions of Notification No.45/2010-ST, dated 20.07.2010.
In the light of the foregoing, the impugned demand is not sustainable and is accordingly quashed. and the appeal allowed.