Electricity transmission infrastructure work-bays, substations and lines-with customer charges held not liable to service tax

Whether activities of erecting electricity transmission infrastructure, including bays, substations and transmission lines, and recovering charges from customers are exigible to service tax was the dominant issue. Applying the settled position that such works are integrally connected with transmission of electricity and fall outside the charge of service tax, the Tribunal held the demand unsustainable; any apprehension about consequent refund was left to be addressed by the department through scrutiny of any refund application. The appeal was allowed.

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Issues: (i) Whether the activity of erection of bays, sub-stations and transmission lines for transmission of electricity and charging customers falls under the negative list (post-July 2012) and is not taxable; (ii) Whether the appeal is maintainable/allowable in view of earlier decision in the appellant's favour despite payment of 50% service tax under reverse charge and possible credit taken.

Issue (i): Whether the activity of erection of bays, sub-stations and transmission lines for transmission of electricity and charging customers is covered by the negative list for the period after July 2012.

Analysis: The Tribunal applied the ratio of the earlier decision in Appeal No. 10318 of 2017-DB concerning the same appellant and similar period (post-July 2012). That earlier decision examined the relevant clauses and legal provisions applicable to the negative list period and held that the activities of putting up transmission infrastructure and charging customers fall within the negative list and are therefore not taxable.

Conclusion: The activity of erection of bays, sub-stations and transmission lines for transmission of electricity and charging customers is not taxable under the negative list for the period after July 2012; conclusion in favour of the assessee.

Issue (ii): Whether the appeal should be allowed despite the appellants having paid 50% of service tax under reverse charge and the likelihood of having availed credit.

Analysis: The Tribunal noted the departmental representative's acceptance that the matter is covered by the cited ratio and observed that any apprehension regarding refunds or credits can be addressed by the department if a refund application is filed by the appellants. On the merits the issue was held to be no longer res integra and covered by precedent.

Conclusion: The appeal is allowable despite prior payment under reverse charge; conclusion in favour of the assessee.

Final Conclusion: The Tribunal allowed the appeal by applying the precedent that the contested transmission-related services fall within the negative list (post-July 2012), and directed that departmental remedies concerning any reverse-charge payments or credits be pursued administratively.

Ratio Decidendi: Activities of erection of bays, sub-stations and transmission lines for transmission of electricity, and charging customers for the same, fall within the negative list and are not taxable for the period after July 2012.

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