2024 (2) TMI 254 - AT - Service Tax

Electrical installation services not taxable under Section 65(39a) before Finance Act 2005 amendment effective 16.06.2005

CESTAT NEW DELHI held that electrical installation and wiring services were not taxable under Section 65(39a) prior to 16.06.2005. The definition of ... Levy of service tax - Commissioning or Installation service - whether the activity of the appellant is covered under Section 65(39a) prior to 16.06.2005? - HELD THAT:- From the amended definition of Erection, Commissioning or Installation w.e.f. 16.06.2015, the concept has been expanded as prior to the said date the definition did not cover any activity relating to Electrical and Electronic Devices. Installation of Electrical and Electronic Devices including wirings or fittings has been specifically added by virtue of the enactment of the Finance Act, 2005 and since then appellant has been paying the service tax under this category. Reliance has been placed on the decisions of the Tribunal in POWER BEST ELECTRICALS LTD. VERSUS COMMISSIONER OF C. EX, [2007 (10) TMI 138 - CESTAT, BANGALORE], RAJEEV ELECTRICAL WORKS VERSUS COMMISSIONER OF C. EX., CHANDIGARH [2007 (12) TMI 135 - CESTAT, NEW DELHI]. These decisions in clear words observed that Erection services were made taxable from 10.09.2004 and Electrical wiring or Installation of electrical fittings or devices was made taxable only pursuant to the enactment of Finance Act, 2005 on 14.05.2005. In the present case it is found from the records that the appellant undertakes Erection work for Vidhyut Vitran Nigam i.e., Erection of Transmission Line/Tower and the nature of activity involved therein includes conducting route survey, erection of PCC Poles in alignment, including excavation of pit, including back – filing and Consolidation, fixation of Arms, MS Angle, MS Channel, Double Pole Line Structure Guard Packet and Porcelain Insulator, Erection of Lattice Tower, and Drawing of Wire etc. In terms of the enlarged definition of Erection, Commissioning or Installation as provided in Finance Act, 2005, the activity undertaken by the appellant becomes taxable w.e.f. 16.06.2005 and for the said period the appellant has already paid the service tax of Rs.1,37,515/-. Thus, the liability to tax arises only from 16.06.2005 consequent to the amendment enlarging the scope of the services relating to electrical fittings, wiring and other components and devices. Therefore, the demand on account of service tax, interest and penalty is unsustainable. Appeal allowed. Issues involved:The issue involves the confirmation of service tax levy on the appellant by the Commissioner (Appeals) for the period of 10.09.2004 to 15.06.2005, based on the nature of services provided by the appellant in relation to erection work for electricity companies.Summary of Judgment:Issue 1: Interpretation of Taxable Services Prior to 16.06.2005The appellant contested the levy of service tax on the grounds that prior to 16.06.2005, only 'Erection, Commissioning or Installation of plant, machinery, equipment' was taxable, and the inclusion of 'Installation of Electrical and Electronic Devices' post this date expanded the taxable scope. The Tribunal referred to relevant definitions and previous decisions, affirming that the appellant's activities were taxable only from 16.06.2005 onwards due to the legislative amendment.Issue 2: Applicability of Circular No.123/5/2010-TRUThe Tribunal considered Circular No.123/5/2010-TRU which clarified the scope of taxable services under 'Erection, commissioning or installation services.' It analyzed specific activities in dispute to determine their tax status, concluding that the appellant's services fell outside the taxable purview before 16.06.2005, as per the circular's guidelines.Decision:The Tribunal found that the appellant's liability to tax arose only from 16.06.2005 onwards, aligning with the amended legislative provisions regarding electrical fittings and devices. Consequently, the demand for service tax, interest, and penalty for the period in question was deemed unsustainable. As the issue was decided in favor of the appellant on merit, the consideration of the extended period was unnecessary. Therefore, the impugned order confirming the service tax levy was set aside, and the appeal was allowed in favor of the appellant.[Separate Judgment: HON'BLE MS. BINU TAMTA , MEMBER ( JUDICIAL ) And HON'BLE MR. P.V. SUBBA RAO , MEMBER ( TECHNICAL )]