TaxTMI 
TaxTMI 
2020 (11) TMI 624
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....M/s K. Ramachandra Rao Transmission & Projects Pvt. Ltd., (KRRTPL in short) are engaged in providing taxable services under clause (51) read with Clause (44) of Section 65B of the Act, viz. Works contract Service, Erection, commissioning or installation service, transport of goods by road service, renting of immovable property service, supply of tangible goods service etc., and registered with the department vide Registration No. AACCK6220FST001. 3. Intelligence gathered and investigations conducted by the Officers of Directorate General of Goods and Services Tax Intelligence, Hyderabad Zonal Unit (DGGI for short), including scrutiny of the records recovered from and data submitted by the assessee during the course of investigation and the statements recorded from the key personnel of M/s KRRTPL revealed the following. 4. The respondent are engaged in providing erection, commissioning and installation of transmission lines to various transmission corporations viz., i) M/s Power Grid Corporation of India Limited (Andhra Pradesh, Telangana, Karnataka & Uttar Pradesh), ii) M/s Transco, Telangana, iii) M/s Bihar State Power Transmission Company Limited,....
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....of service tax amounting to Rs. 9,77,17,404/- (inclusive of Cesses) on the taxable services rendered during the period from 01.10.2014 to 30.06.2017 under the category of Works Contract Service in terms of proviso to Section 73(1) of the Act; (ii) demand of service tax amounting to Rs. 1,16,11,175/- (inclusive of Cesses) due to non-inclusion of consideration received towards crop compensation/ right of way in the taxable value for the services rendered during the period from 01.04.2014 to 30.06.2017 in terms of proviso to Section 73(1) of the Act; (iii) demand of interest at applicable rates under Section 75 of the Act on the amount demanded at (i) and (ii) above; (iv) imposition of penalties under sections 76, 77 and 78 of the Act. 8. The show cause notice also proposed imposition of penalty under Section 78A on Shri K. Ramachandra Rao, Managing Director of M/s KRRTPL. 9. The show cause notice was assigned to the Commissioner, audit-II Commissionerate for adjudication vide letter C. No. IV/16/218/2018-CC (HZ) Tech dated 23.10.2018 of Chief Commissioner in terms of CBIC letter F. No. 137/19/2018-Service Tax dated 10.09.2018. 10. Vide the impugned....
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....s meant predominantly for use other than for commerce, industry, or any other business or profession;" iii) Further, the taxable services provided to Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;" During the period from 01.04.2015 to 29.02.2016 are also exempted vide Section 102 of the Act. iv) As per the definition given at Clause 2(s) of Notification No. 25/2012-ST dated 20.06.2012, as amended, 'governmental authority', means "an authority or a board or any other body; i) set up by an act of Parliament or a State Legislature, or ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under Article 243W of the Constitution". v) As per the above definition, during the material period, for an entity to get covered in the....
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....e engaged in transmission of high voltage electricity, which cannot be termed as a public amenity. High voltage transmission facilities on the contrary cannot be offered to general public. Therefore, the analogy drawn by Adjudicating authority that transmission companies/ corporations are electricity boards, and since electricity is a public amenity, they satisfy the test of functionality of municipality under Article 243W, is erroneous and far stretched imagination. viii) In view of the above, as the transmission companies/ corporations are not fulfilling the most important condition in the definition of Governmental authority, they cannot be treated as Governmental Authorities. ix) Further, the said exemption notification, at Sl. No. 12(a)/12A (and also Section 102 of the Act for the period from 01.04.2015 to 29.02.2016), clearly provides for exemption to such services provided to the Government, a local authority or a governmental authority only if the works meant are predominantly for use other than for commerce, industry, or any other business or profession. In the instant case, the service receivers, transmission companies/ corporations are commercial/ busin....
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....ve shown service tax of Rs. 1,56,137/- towards Invoice No. 001 dated 07.04.2014 for work Order No. 2907 in Service Tax Ledger Account in respect of service rendered to M/s Bihar Transmission Company. xii) Further, in all work orders there is a mention regarding payment of service tax. To cite an example, in Work Order No. 2907/BSPTCL dated 05.12.2013 issued by M/s Bihar State Power Transmission Co. Ltd., at para No. 1.0 Contract Value of PACKAGE A, B and C, mentioned that value of execution component (including Tree & Crop compensation) are inclusive of service tax. The relevant parts of para 1.0 and para 31 of the above contract are as hereunder:- "This value is inclusive of service tax. In case of increase in rate of Service tax no extra payment shall be made. The breakup of the prices have been furnished in the price schedule annexed with this order. The landed cost of Pkg. -'A' , Pkg.-'B', & Pkg.-'C' in totality will be Rs. 2,74,25,505.00 inclusive of freight, insurance and service tax." Para 31. SERVICE TAXES: Applicable service tax etc. will be payable as included in quoted rates. Increase in *service (if so) as applicable at billi....
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....le in the instant case. Further, the assessee have received service tax on the reimbursement amounts in certain contracts but they did not pay to the Government exchequer treating that there is no service at all. The stand taken by M/s KRRTPL is irregular as it is not a pure agent activity and moreover they have also collected certain service tax amount from the clients. 8. Further, the commissioner's observation that the issue in dispute has already been examined by him in an earlier OIO No. HYD-SVTAX-000-COM- 37-15-16 dated 29.01.2016 in the case of same assessee is also erroneous as the said earlier OIO pertained to applicability of 'works contract composition scheme' for the different period i.e. 2010-11 to 2013-14 and therefore not relevant/ not having any bearing on the issue. 9. In view of the above, the subject order in original, in so far as and to the extent of dropping the demands of service tax of Rs. 9,77,17,404/- and Rs. 1,16,11,175/- as detailed supra and the consequential non-demand of interest thereon and non-imposition of penalties under Section 77 and 78 on the assessee in respect of the said demands, is not legal and proper. 10. Learned Authorised Repre....
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.... Pvt. Ltd. vs. CC,C.Ex&ST, Patna-2016 (42) STR 681. 13. It is submitted that the corporations are owned & controlled (majority holding) and their functions and responsibilities being also regulated by the respective governments. 14. It is further urged, under the directions of respective Governments, power is provided free of charge to agricultural sector. Power is provided at concessional tariff rates to economically poor families. Several other concessions are also extended to families of below poverty line, small scale industries, backward regions and areas. As several exemptions/ concessions on the power produced and transmitted by the corporations, are extended by the Union/ State Governments, the power corporations always depend upon budgetary supports from the respective governments for the maintenance and operational expenditure. The corporations are therefore set up predominantly for purposes other than for Commerce or Industry or any other business or profession. These projects constitute infrastructure facilities and civic amenities the state provides in public interest, and not activities of commerce or industry. Civil structures undertaken for government/ governm....
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.... has been paid as verified and confirmed and accepted by the learned Commissioner. 17. Further urges, as the disputed transactions are covered by the above provisions, exemption availed does not suffer from any infirmity. Impugned orders passed by the learned Commissioner of Customs, Central Tax Hyderabad -Audit-II Commissionerate are therefore valid and legally maintainable. 18. It is also submitted that in own case of the respondents, similar exemption under the above notifications was extended by the same Commissioner for the period 2010-11 to 2013-14, which stands accepted by Revenue vide OIO No. HYD-SVTAX-000-COM-37-15-16, dated 29.01.2016. 19. Further urges, in the following cases services of civil structures provided to governmental authorities, which were for purposes other than for commerce/ industry or any other business or profession i.e. not being primarily for industrial or commercial purposes were held not liable to service tax. i) Vensa Infrastructure Limited vs. CST, Hyderabad GST Commissionerate F. O. No. A/31588/2018 dt. 21.12.2018 passed by the Regional Bench of CESTAT at Hyderabad. ii) KMV Projects Ltd. vs. CST Hyderabad -F. O. No. A/3....
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....oonji & Company Pvt. Ltd. vs. CC, CE&ST, Patna -2016 (42) STR 681 (Pat.) Shapoorji Paloonji was engaged by 'Indian Institute of Technology', a body incorporated by the Institutes of Technology Act, 1961. IIT appointed 'National Building Construction Corporation Limited' as a consultant for construction of its academic building project. Shapoorji Paloonji was appointed as contractor for construction by NBCC. The terms of the contract provided - the work awarded is on works contract basis and Shapoorji Paloonji will be responsible for payment of any tax levied on transfer of property in goods involved in the works contract under the Bihar Government Sales Tax Act, which shall not be reimbursable. Further provided that the contractor / Shapoorji Paloonji is required to have a valid service tax registration under works contract service. Further, specified that the rates quoted are exclusive of service tax. Further, provided that Shapoorji Paloonji will be required to submit service tax paid challans to NBCC for reimbursement. 25. Shapoorji Paloonji started paying service tax in respect of the said project. The Indian Audit and Account Department raised audit objection in June, 2015 ....
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....of Government Authority as amended by the amending Notification No. 2/2014 means - authority or Board or any other body set up by an Act of Parliament or State Legislature is a Government Authority. Therefore, Notification No. 25/2012 grants exemption to activity of construction undertaken by Shapoorji Paloonji for I.I.T., from payment of service tax. 29. Taking notice of the argument of Revenue that only a authority with 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution, alone is the Government Authority, entitled to exemption from levy of service tax. As such provision in the notification as amended vide Notification No. 2/2014-ST, is applicable to both clauses of 2(s) and not to sub clause (ii) of clause 2(s) alone of the said notification. The High Court held that the contention of Revenue is not sustainable in law. The government authority as defined in the Notification dated 30.01.2014, means an Authority or a Board or any other body set up by an Act of Parliament or State Legislature. The provisions contained in sub-clause (i) and sub-clause (ii) of Clause 2(s) are independent....
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.... including those in relation to the matters listed in Schedule XII; (b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in Schedule XII." 31. Further Schedule XII of the Constitution reads as follows:- 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation, conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. 10. Slum improvement and upgradation. 11. Urban poverty alleviation. 12. Provision of urban amenities and facilities such as parks, gardens, play grounds. 13. Promotion of cultural, educational and aesthetic asp....
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....rit in the appeal of Revenue and same is dismissed. The respondent-assessee is entitled to consequential benefit, in accordance with law. (Pronounced on 2020) (Anil Choudhary) Member (Judicial) (P. Venkata Subba Rao) Member (Technical) P. Venkata Subba Rao 37. I concur with my brother Ld. Member (Judicial) Shri Anil Choudhary as far as the facts of the case are concerned. I also agree with him that Notification no. 25/2012-ST entry S.No. 12A is relevant for the purpose which has been reproduced in pages 6&7 of this Order. The conditions to be fulfilled for an assessee to be eligible for this exemption notification as indicated in page 7 are that the service recipient must be an entity which: a) Should be set up by an Act of the Parliament or a State Legislature or b) Established by the Government and there should be 90% or more participation by way of equity or control by the Government To carry out any functions entrusted to a municipality under Article 243W of the Constitution. In the case of Shapoorji Pallonji (supra) the Hon'ble High Court of Patna has held that the above clause is disjointed and therefore, the condition of performing f....