Appeal allowed under Notification No. 45/2010 ST exempting service tax.

The tribunal allowed the appeal, determining that the appellant's activities were exempt under Notification No. 45/2010 ST, leading to no service tax liability. The tribunal did not delve into the issues of credit and notifications due to the exemption's applicability. The decision was rendered on 13.06.2018.

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Issues Involved:
1. Whether the activity undertaken by the appellant can be treated as a composite and indivisible contract.
2. Whether there is a nexus between services rendered by the appellant and the transmission and distribution of electricity to qualify for exemption under Notification No. 45/2010 ST.
3. Whether the credit and the Notifications availed by the appellants are correct in law.

Detailed Analysis:

Issue 1: Composite and Indivisible Contract
The appellant argued that their contracts were composite and indivisible, thus not liable for service tax prior to 01.06.2007, as per the Supreme Court's decision in CCE, Kerala v. Larsen & Toubro Ltd. The contracts involved the supply of materials and erection, commissioning, and installation services, which were treated as a single composite contract. The appellant cited various judgments supporting that composite contracts were not subject to service tax before 01.06.2007. The department, however, contended that the contracts were divisible, with clear bifurcation of values for supply and services, making them liable for service tax. The tribunal found that while the contracts were composite, they were not indivisible, thus the Supreme Court's decision in Larsen & Toubro Ltd. was not entirely applicable.

Issue 2: Nexus with Transmission and Distribution of Electricity
The appellant claimed exemption under Notification No. 45/2010 ST, arguing that their activities related to the transmission and distribution of electricity. The department argued that the appellant's activities were for creating infrastructure and not directly related to transmission and distribution. The tribunal, referencing multiple judgments, concluded that erection, commissioning, and installation services fall within the ambit of activities related to the transmission of electricity. Therefore, the exemption under Notification No. 45/2010 ST was applicable to the appellant's activities.

Issue 3: Correctness of Credit and Notifications
The appellant argued that they were entitled to Cenvat credit under Notification No. 19/2003, which did not bar the availment of input service credit. The department contended that the credit was wrongly availed as the appellant opted for Notification No. 1/2006, which barred such credit. The tribunal noted that since the appellant was eligible for exemption under Notification No. 45/2010 ST, the issue of credit and notifications became irrelevant.

Conclusion:
The tribunal allowed the appeal, holding that the appellant's activities were exempt under Notification No. 45/2010 ST, thus no service tax was payable. The tribunal did not consider the issues of credit and notifications further due to the exemption applicability. The order was pronounced in open court on 13.06.2018.

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