Service tax on electricity transmission works held unsustainable where erection and commissioning supported transmission infrastructure.

Charges recovered for erection, commissioning and installation work connected with transmission of electricity were treated as outside service tax liability for the relevant period. The dispute concerned activities such as erection of bays, substations and transmission lines undertaken by a State Transmission Utility for electricity transmission. Relying on earlier decisions of the same Bench, the tribunal noted that services used for transmission of electricity were not taxable under the notifications relied upon and under the negative list regime in section 66D. The demand was therefore held unsustainable, and the assessee succeeded.

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Issues: Whether the service tax demand on charges recovered for erection, commissioning and installation activities connected with transmission of electricity was sustainable.

Analysis: The demand arose from activities undertaken by a State Transmission Utility in relation to erection of bays, substations and transmission lines for transmission of electricity. The dispute had already been covered by earlier decisions of the same Bench holding that services used for transmission of electricity were not liable to service tax for the relevant period, including the period governed by the notifications relied upon and the negative list regime under section 66D. The present appeal was also treated as falling within that settled position, and the demand was therefore held unsustainable.

Conclusion: The service tax demand was not sustainable and the appeal succeeded in favour of the assessee.

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