Rural electrification works exempt from service tax where services were supplied for non-commercial use under the exemption notification.

Services rendered under a Central Government rural electrification scheme were treated as exempt from service tax under Notification No. 25/2012-S.T. because the works were provided to the State Government for use other than in commerce, industry or any business or profession. The Tribunal applied the exemption covering construction, erection, commissioning and allied works, and noted that an earlier identical matter had already been decided in favour of exemption. On that basis, the services qualified for the notification and no service tax was payable.

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Issues: Whether the services rendered under the Rajiv Gandhi Grameen Vidyutikaran Yojana for rural electrification were exempt from service tax under Notification No. 25/2012-S.T. dated 20.06.2012.

Analysis: The contracts were awarded under a Central Government rural electrification scheme for works provided to the State Government. The services were meant for use other than in commerce, industry or any other business or profession, bringing them within the exemption for construction, erection, commissioning and allied works covered by the notification. The Tribunal also noted that the same issue had already been decided in an earlier identical matter in favour of exemption.

Conclusion: The services were exempt and no service tax was payable.

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