2018 (7) TMI 856 - AT - Service Tax

Tribunal overturns service tax demands in hydro power projects appeals, citing exemptions and thresholds

The Tribunal ruled in favor of the appellants in multiple appeals concerning service tax demands on construction and maintenance services for hydro power ... Works contract service - transmission of electricity irrespective of classification - services rendered by the appellant for construction of various structures, superstructures etc. of hydro power projects for generation of electricity for TNEB - N/N. 11/2010-ST and 45/2010-ST - Held that:- The Tribunal in the case of PES Engineers (P) Ltd, [2017 (7) TMI 687 - CESTAT HYDERABAD], has held that irrespective of the classification of services of service relating to/for transmission of electricity are exempted from payment of service tax by this notification - demand cannot sustain. Works contract service - dedicated water supply scheme to Coimbatore City Municipal Corporation under JNNURM Scheme - Held that:- This being public utility service and not being for commercial purpose, is not covered under taxable services - The Tribunal in the case of BMS Projects (P) Ltd. [2017 (9) TMI 1386 - GUJARAT HIGH COURT] has held the above services to be not liable to levy of service tax - demand cannot sustain. Supply of tangible goods service - renting of construction of equipment by the appellant to L&T - Works contract service in respect of hydro power projects - Held that:- Evidently, the value of these services being less than ₹ 10 lakhs is exempted under N/N. 6/2005-ST as all other income of the appellant falls under exempted services - the demand cannot sustain as it falls below threshold limit and requires to be set aside. Works contract service for construction of staff quarters for TNEB employees in the power project - N/N. 11/2010-ST and 45/2010-ST - Held that:- The Tribunal in Sima Engineering Constructions [2018 (5) TMI 405 - CESTAT CHENNAI] has considered the very same issue and held that such services of construction of staff quarters inside the power project is not levy to service tax as per the notifications - demand cannot sustain. Management, maintenance or repair service - services rendered by the appellant at Periyar Lower Camp and Suriliyar Lower Camp which are both small hydroelectric power projects - Held that:- These activities being services related to for transmission of electricity will be covered by the exemption Notifications No. 11/2010 and 45/2010 - The decisions in the case of PES Engineers [2017 (7) TMI 687 - CESTAT HYDERABAD] would apply to the demand of service tax in respect of management, maintenance or repair services in regard to hydroelectric power projects also - demand set aside. Appeal allowed - decided in favor of appellant. Issues Involved:Service tax demand on construction services for various projects, demand on works contract services, demand on supply of tangible goods services, demand on management, maintenance, or repair services for civil structures at hydro power projects.Analysis:- The appeals involved multiple issues related to service tax demands on various construction and maintenance services provided for hydro power projects and other public utility schemes. The demands were based on show cause notices issued to the appellants, leading to confirmation of the demands along with interest and penalties by the Commissioner of Central Excise.- The appellants contested the demands, arguing that the services provided were either exempt from service tax or fell below the threshold limit for taxation. They presented detailed submissions for each appeal, citing relevant legal provisions, notifications, and precedents to support their claims.- The Tribunal considered the arguments presented by both sides and analyzed the nature of services provided by the appellants in each appeal. They referred to specific notifications such as 11/2010-ST and 45/2010-ST, which exempted services related to transmission of electricity from service tax.- In each appeal, the Tribunal examined the classification of services, the purpose for which they were provided, and their relation to electricity transmission. They also referred to previous decisions, such as the case of PES Engineers (P) Ltd, to determine the applicability of service tax on the services in question.- After thorough analysis, the Tribunal concluded that the demands of service tax in all the appeals could not be sustained. They set aside the impugned orders and allowed the appeals with consequential relief, if any, in favor of the appellants.This detailed analysis of the judgment highlights the key arguments presented by the appellants, the legal provisions and precedents considered by the Tribunal, and the ultimate decision to set aside the service tax demands in all the appeals.