Service tax exemption for electrical works denied where construction and commissioning were not proved to be transmission or distribution activities.

Activities involving construction, erection, testing and commissioning of high tension and low tension electrical lines and distribution transformers were not shown to be activities of transmission or distribution of electricity, so Notification No. 45/2010-S.T. was held inapplicable. The appellant's admission of liability for a substantial part of the demand also weighed against a full waiver. On that basis, pre-deposit was directed for 50% of the confirmed service tax demand, with waiver of the balance and stay of recovery during the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of the confirmed service tax demand, and whether the benefit of Notification No. 45/2010-S.T. applied to the activities of construction, erection, testing and commissioning of electrical lines and distribution transformers.

Analysis: The appellant sought exemption on the footing that the work related to transfer, distribution, transmission and allied electrical activities. The demand, however, arose from activities found to be construction, erection, testing and commissioning of high tension and low tension lines and distribution transformers, which were not shown to be activities of transmission or distribution of electricity. The appellant also admitted liability for a substantial portion of the demand, and the record disclosed no basis to extend the exemption notification to the impugned activities.

Conclusion: The appellant was held not entitled to the exemption under Notification No. 45/2010-S.T., and was directed to deposit 50% of the confirmed demand, with waiver of the balance pre-deposit and stay of recovery during the pendency of the appeal.

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