Electricity transmission and distribution exemption applied to erection services, making the service tax demand unsustainable and refund payable.

Erection work connected with the Meghalaya State Electricity Board was treated as falling within the exemption for taxable services relating to transmission and distribution of electricity under Notification No. 45/2010-ST. On that basis, the service tax demand could not survive because the activity was covered by the exemption and the service recipient had not borne the tax. The amount recovered from the appellant during investigation, having been treated by the department as service tax on the contract's service component, was directed to be refunded with interest.

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Issues: Whether the appellant's services for erection work connected with the Meghalaya State Electricity Board were exempt from service tax under Notification No. 45/2010-ST dated 20.07.2010, and whether the amount recovered during investigation was liable to be refunded.

Analysis: The services were held to fall within the exemption granted for taxable services relating to transmission and distribution of electricity. The record showed that the service charge component in the contract had been treated by the department as service tax, and the amount was recovered from the appellant during investigation. As the service recipient had not borne the tax and the appellant's activity was covered by the exemption notification, the demand could not survive.

Conclusion: The service tax demand was unsustainable, and the amount recovered from the appellant was directed to be refunded with interest.

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