GTA services for electricity board's line materials and tower parts exempt from service tax under Notifications 11/2010-ST and 45/2010-ST

CESTAT Chennai held that GTA services availed by electricity board for transportation of line materials and tower parts are exempt from service tax under Notifications 11/2010-ST and 45/2010-ST, as these services relate to transmission and distribution of electricity. The tribunal found that demanding service tax from the appellant would constitute double taxation since the tax was already paid by service providers. Extended period of limitation was deemed unjustified for interpretational issues. The impugned order was set aside and appeal allowed.

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Issues Involved:
1. Taxability of GTA Services on Reverse Charge basis received by TNEB, Mettur.
2. Invocation of extended period for demand of Service Tax and imposition of penalties.

Summary:

1. Taxability of GTA Services on Reverse Charge basis received by TNEB, Mettur:

The appellant, Tamil Nadu Electricity Board (TNEB), Mettur, engaged transport services from two contractors for transporting Line materials and Tower parts. The Department found the appellant liable for Service Tax under Section 65(50b) of the Finance Act, 1994, read with Rule 2(1)(d)(v) of Service Tax Rules, 1994, as the appellant is a company registered under the Companies Act, 1956. The appellant argued that the entire amount of Service Tax demanded had been paid by the transport contractors before and shortly after the issuance of the Show Cause Notice. They cited exemption Notifications No. 11/2010-ST and No. 45/2010-ST, which exempt services related to transmission and distribution of electricity from Service Tax. The Tribunal referred to various decisions, including KEC International Ltd. and Paschimanchal Vidyut Vitran Nigam Ltd., which supported the appellant's contention that services related to transmission and distribution of electricity are exempt.

2. Invocation of extended period for demand of Service Tax and imposition of penalties:

The appellant contended that the extended period for demand and penalties was not justified as there was no violation of the Finance Act, 1994, and the entire Service Tax had been paid. The Tribunal noted that major portions of the Service Tax were paid before the issuance of the Show Cause Notice, and the remaining amount was paid within two months after the notice. The Tribunal also observed that the services availed were related to transmission of electricity, which are exempt under the aforementioned notifications. The Tribunal held that invoking the extended period was not justified as the issue was interpretational in nature and the intention of the Government was clear regarding the exemption for entities involved in the generation or transmission of electricity.

Conclusion:

The Tribunal concluded that the impugned Order-in-Appeal No. 132/2014-ST dated 15.05.2014 was not sustainable as the entire Service Tax demanded had been paid and the services availed were exempt. The appeal was allowed with consequential relief, if any. The order was pronounced in open court on 30.10.2023.

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