Electricity distribution exemption extends to installation and commissioning services directly linked to grid infrastructure and metering.

Services of erection, commissioning and installation used for electricity distribution were treated as covered by the exemption and immunity notifications applicable to transmission and distribution of electricity. The phrase "in relation to" was read broadly to include activities with a direct and proximate nexus to distribution, including installation of sub-stations, transmission towers, meters and related infrastructure necessary for billing and recovery. Read together, the notifications were taken to reflect a policy of excluding such connected services from service tax, and the disputed services were therefore regarded as not taxable.

---

---

Issues: Whether services of erection, commissioning and installation of infrastructure, meters and related equipment used for distribution of electricity fall within the exemption granted to taxable services relating to transmission and distribution of electricity.

Analysis: The exemption notification issued for distribution of electricity and the subsequent immunity notification were read together as reflecting a clear policy to exclude such services from service tax. The expression "in relation to" was treated as wide enough to cover activities having a direct and proximate nexus with distribution of electrical energy. Since effective distribution of electricity necessarily involves installation of sub-stations, transmission towers, meters and related infrastructure for billing and recovery, those activities were held to be part of the exempted service. Earlier tribunal decisions were relied upon to support the same construction of the notifications.

Conclusion: The disputed services were covered by the exemption and immunity notifications and were not liable to service tax.

---