2019 (8) TMI 1690 - AT - Service Tax

Tribunal quashes service tax demand, citing composite works contract exemption for electricity services.

M/s Gee Cee Metals Pvt. Ltd. Versus Commissioner of Central Excise and Service Tax, Meerut (Uttar Pradesh)

The Tribunal concluded that the service tax demand on the appellant was not sustainable, quashing the order and allowing the appeal with consequential ... Valuation - activity in relation to laying of cable for transmission and distribution of electricity - inclusion in the assessable value - Supply and erection of 4 Pole structure with 8.5 m long Steel Tubular Poles (410-SP-23) for three phase four wire line - Supply and erection of three phase 25 KVA, 11KV/0.433 KV Distribution Transformer substation mounted on DP Structure - Supply and erection of single phase 16 KVA 6.3KV/ 250V Distribution Transformer - Guarding - HELD THAT:- The issue is no more res-integra in view of the decision in M/S UP RAJKIYA NIRMAN NIGAM LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [2015 (8) TMI 66 - CESTAT NEW DELHI] where it was held 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 - the decision is squarely applicable to the facts of the present appeal. Appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the value of items listed under Sl. No. 8 to 11 should be included in the taxable value for Erection, Commissioning, or Installation Services.2. Applicability of Notifications No. 45/2010-ST and 32/2010-ST regarding exemption from service tax for services related to transmission and distribution of electricity.3. Determination of whether the contract is a composite works contract or divisible into supply and service components.4. Validity of the service tax demand under the category of Erection, Commissioning, and Installation Services.Issue-wise Detailed Analysis:1. Taxable Value Inclusion:The appellant had paid service tax only on the erection charges of Rs. 1070.00, as mentioned at Sl. No. 12 of the representative invoice. The department contended that service tax should be paid on all elements listed under Sl. No. 8 to 12, which include 'Concreting poles,' 'earthing,' 'concreting of stay,' 'cartage charges,' and 'Erection charges,' cumulatively amounting to Rs. 3210.00. This resulted in a cumulative short payment of service tax amounting to Rs. 50,98,026/- for the period 2007-2008 to 2010-2011, leading to the issuance of a show cause notice and subsequent confirmation of the charges in the order-in-original.2. Applicability of Exemption Notifications:The appellant argued that their activities were related to laying cables for transmission and distribution of electricity, which are exempted from service tax under Notifications No. 45/2010-ST dated 20 July 2010 (for the period up to 21 June 2010) and No. 32/2010-ST dated 22 June 2010 (for the period after 22 June 2010). The Tribunal referenced these notifications, which exempted service tax on all taxable services related to transmission and distribution of electricity provided by a service provider to a service receiver.3. Composite Works Contract:The appellant contended that the entire contract was a composite works contract, not merely for erection, commissioning, and installation services. The contract dated 14 November 2005 included clauses indicating it was a single, indivisible contract for works contract. The Tribunal noted that even if the value of materials and services were shown separately, it remained one single indivisible contract, as per the terms of the agreement.4. Validity of Service Tax Demand:The Tribunal found that the issue was no longer res-integra due to the decision in U.P. Rajkiya Nirman Nigam Ltd. versus Commissioner of Central Excise, Meerut, which held that service tax on services related to transmission and distribution of electricity was not required to be paid under the relevant notifications. The Tribunal also accepted the submission that the whole contract was a works contract, supported by the Supreme Court judgments in Kone Elevators India Pvt. Ltd. versus State of Tamil Nadu and M/S Larson & Toubro.Conclusion:The Tribunal concluded that the service tax demand was not sustainable and quashed the impugned order. The appeal was allowed with consequential relief, clarifying that this order would not apply to any payments already made by the appellant under the erection, commissioning, and installation service on their own.