Service tax exemption for transmission and distribution electricity work applied, with limited remand to verify customer collection

Activities relating to erection and commissioning of transmission lines and erection of poles for transmission and distribution of electricity were treated as services in relation to transmission and distribution of electricity. Notification No. 45/2010-ST was applied for the relevant period, so no service tax liability arose on those services. The matter was remitted only for limited verification of whether service tax had been collected from customers; if collection is established, consequential recovery with interest may follow.

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Issues: Whether service tax was payable on activities relating to erection and commissioning of transmission lines and erection of poles for transmission and distribution of electricity, and whether the matter required a limited remand to verify collection of service tax from customers.

Analysis: The activities were undisputedly in relation to transmission and distribution of electricity. In view of Notification No. 45/2010-ST dated 20.07.2010, the Tribunal held that the notification applied for the period involved and that no tax liability arose on the services in question. At the same time, since the Revenue's concern was that the appellant may have collected service tax from customers and no records were produced on that aspect, the matter was remanded only for verification of such collection and consequential recovery, if any, with interest.

Conclusion: Service tax was held not payable on the impugned activities, but the matter was remitted for the limited purpose of examining whether tax had been collected from customers and, if so, recovering it with interest.

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