Tribunal overturns service tax liability on electricity transmission & distribution due to recent exemptions

The Tribunal set aside the impugned orders confirming a service tax liability against the appellants for transmission and distribution of electricity under the business support service category, with penalties imposed. The Tribunal found recent notifications exempting service tax on such services with retrospective effect, making the demands unsustainable. The Tribunal rejected the argument that clearance from the Committee on Disputes was necessary for the public sector undertaking appellants to file an appeal, noting the objections were not raised timely. The appeals were allowed with consequential relief, and the Miscellaneous Applications were disposed of accordingly.

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Issues:
Service tax liability on transmission and distribution of electricity under business support service category, applicability of exemptions, requirement of clearance from Committee on Disputes for filing appeal by public sector undertaking.

Analysis:
The judgment pertains to appeals listed for final disposal along with Miscellaneous Applications. The first Miscellaneous Application for early hearing was rejected as it became infructuous. However, two other Miscellaneous Applications were accepted to bring relevant facts on record. The impugned orders confirmed a service tax liability against the appellants for transmission and distribution of electricity under the business support service category, with penalties imposed. The appellants argued that recent notifications by the Government exempted service tax on such services with retrospective effect, making the demands unsustainable.

In response, the ld. SDR contended that as the appellants are a public sector undertaking, clearance from the Committee on Disputes was necessary to file an appeal before the Tribunal. However, the Tribunal did not agree with this argument, noting that the objection was not raised at the preliminary stage of the appeals and that stay applications were already dealt with. The Tribunal highlighted that the matters had reached the High Court of Madhya Pradesh, which directed the Tribunal to dispose of the appeals promptly. Consequently, the preliminary objection raised by the ld. DR was rejected.

The Tribunal examined the relevant notifications, specifically Notification No. 11/10-ST and Notification No. 45/2010, which exempted services related to transmission and distribution of electricity. The Tribunal found that the impugned orders demanding service tax on such services were unsustainable in light of these notifications. Therefore, the Tribunal set aside the impugned orders, allowing the appeals with consequential relief, if any. The Miscellaneous Applications were disposed of accordingly.

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