AI Drafter 
TaxTMI 
TaxTMI 
2025 (3) TMI 378
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....1303 (U.P.), and order for recovery of the same under the proviso to Sub-Section (1) of Section 73 read with Section 73 (2) of Chapter V of the Finance Act, 1994 alongwith appropriate interest under Section 75 of the Act. Ibid. Since the party have placed before me two GAR-7 challans dated 23.03.2015 evidencing payment of service tax amounting to Rs. 162077/- and 46216/-respectively, I appropriate the said deposits against the demand confirmed herein. (ii) I also impose a penalty of Rs. 10,000/- (Rupees Ten Thousand Only), upon M/s M.K:S. Enterprises, Chakpadauna, Gopiganj, S.R.N. Bhadohi-221303 (U.P.) under the provisions of Section 77(1) of the Finance Act, 1994, for having contravened the provisions of Section 69 of the Act read. with Rule 4 of the Rules. (iii) I also impose a penalty of Rs. 10,000/- (Rupees Ten Thousand Only), upon M/s M.K.S. Enterprises, Chokpadauna, Gopiganj, S.R.N. Bhadohi 221303 (U.P.) under the provisions of Section 77(2) of the Finance Act, 1994, for having contravened the provisions of Section 70 of the Act read with Rule 7 of the Rules. (iv) I also impose a penalty of Rs. 29,52,418/- (Rupees Twenty Nine Lakhs Fifty Two Thousan....
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....said period. 2.5 Investigations were made and statements of Shri Shashi Kant Tripathi, Advocate (authorized person of party) was recorded on 01.09.2015. On the basis of inquiries and investigations made it appeared that appellant has short paid service tax as detailed in table bellow:- Sl. No Period Value of taxable service Rate of (Rs) Rate of service tax Service Tax payable (Rs) 1 2010-11 1,30,19,761/- 10.30% 13,41,035/- 2 2011-12 2,43,92,756/- 10.30% 25,12,454/- 3 2012-13 5,37 32,982/- 12.36% 66,41,397/- 4 2013-14 12,44,54,467/- 12.36% 1,53,82,572/- Total 21,55,99,966/- 2,58,77,457/- 2.9 Demand Cum Show Cause notice dated 23.09.2015 was issued to the appellant asking them to show cause as to why- "(a) Service Tax amounting to Rs.2,58,77,457/- (Rupees Two crore fifty eight lacs seventy seven thousand four hundred and fifty seven only), including Education Cess and Secondary and Higher Education Cess, should not be demanded and recovered from them under the provisions of proviso to Section 73 (1) of Chapter V of the Finance Act, 1994 along with inte....
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....t the allegations made in the impugned SCN. On the basis of investigation conducted by the department, it appeared that during the period from 2010-11 to 2013-14, the party, under composite contract has provided maintenance & repair service to UPPCL & PVVNL by way of maintaining and repairing old H.T/L.T lines, replacement of PCC poles and conductors as well as maintenance of electricity feeders at different places. Prior to 01.07.2012, the service provided by the party appeared to be covered under maintenance and repair service, whereas for the period from 01.07.2012, the party failed to submit any evidence that the service provided by them, involved material on which VAT was paid or payable. Therefore, for the period from 01.07.2012, in the absence of fulfillment of condition, the service provided by the party cannot be termed as works contract service', as defined under section 658(54) of the Act and appeared to be a taxable service as per section 65B(51) of the Act. Therefore, for the period prior to 01.07.2012, the service provided by the party appeared to be classifiable under 'maintenance & repair service', as defined under clause (zzg) of section 65(105) of the ....
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....ty's taxability under "management, maintenance or repair service" or "works contract service", I proceed to examine the facts of the instant case, inasmuch as, the nature and contents of the contracts executed by the party, which have been referred to and relied upon as RUD 4 in the impugned SCN. The same is illustrated as under: S. No Contract No. & Date Description of Job Contract Amount (Rs.) Contractee/ Service Receiver 1. 268/EDD(M)/08-09 Shifting & Erection of electric poles by digging trench, grouting at Kazipur, Bhadohi 121875.00 EE, PVVNL, Bhadohi 2. 269/EDD(M)/08-09 Shifting & Erection of electric poles by digging trench, grouting at Azimullah Crossing, Bhadohi 129330.00 EE, PVVNL, Bhadohi 269/EDD(M)/08-09 Replacement & re-laying of new 11KV XLPE cable at 33/11 KV sub-station at Magahar 135200.00 EE, PVVNL, Bhadohi 4. 269/EDD(M)/08-09 Replacement & re-laying of new 11KV XLPE cable at 33/11 KV sub-station at Magahar to Girdbadgaon 145450.00 EE, PVVNL, Bhadohi 5. 270/EDD(M)/08-09 Erection of 12 PCC poles, 20 nos. insulators, 900 m. HT line at Jiyanpur, Jhowa & ....
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....rm maintenance is defined as the upkeep or preservation of condition of property including cost of ordinary repairs necessary from time to time for that purpose 'Maintenance' is to keep a machine, building, etc. in a good condition by periodically checking and servicing or repairing, whereas 'repair' is a one time activity. Maintenance is a continuous process whereas repairing may be incidental or ancillary Further, the term 'Immovable property Includes roads, airports, railways, buildings, parks, electrical installations. Further, as per Sec.65 clause 105 sub clause (zzg) the taxable service means service rendered by any person in relation to management, maintenance or repair. 8.5 WORKS CONTRACT SERVICE Section 65(105)(zzzza) of the Act defines the 'Works Contract Service' w.e.f (01.06.2007) as follows: "taxable service" means any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. For the purposes of this....
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....works contract service". Contrary to the said allegation, I find that a Central legislation like the Finance Act, 1994, cannot be subordinate and subject to applicability of a State legislation ie. the State VAT Act. It is true that in respect of the contracts which are subject to levy of State "works contract tax WCT" shall necessarily be classified as "works contract service" as defined under the Section 65(105)(zzzza) of the Act. However, if State "works contract tax WCT" has not been charged or deducted in respect of a particular contract, the same shall not be classified as "works contract service" under the Finance Act, 1994, is not true. State Vat laws operate under separate set of exemptions. 8.8 Notwithstanding the above, Notification No. 11/2010S.T., dated 27-2-2010, seeks to grant exemption to services provided for transmission of electricity. The said notification reads as under: In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable ....
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.... electricity provided by the service provider to the service deserver, which was not being levied in accordance with the said practice shall not be required to be paid in respect of the said taxable services relating to transmission and distribution of electricity during the aforesaid period 8.31 For applying the provisions of the notifications enumerated above, it is imperative to examine the purport of the terms "transmission and "destribution". Section 2 (74) of the Electricity Act, 2003, defines-"transmission means conveyance of electricity by means of transmission lines and the expression transmission shall be construed accordingly." Section 2 (70) of the Electricity Act, 2003, defines "distribution means supply in relation to electricity and means the sale of electricity to a licensee or consumer". 8.12 Furthermore, CBEC vide Circular No. 123/5/2010TRU, dated 24-5-2010, Issued under F.No. 332/5/2010 TRU regarding applicability of Service tax on laying of cables under or alongside roads and similar activities wherein it has been clarified by the Board that- "Disputes have arisen in some parts of the country regarding applicability of service tax on c....
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....ansfer of property in goods involved is leviable to a tax as sale of goods) rather than the nature of activities undertaken, that distinguishes it from the previously statud taxable services. Thus, even in the case of 'works contract if the nature of the activities is such that they are excluded from aforesaid two services then they would generally remain excluded from this taxable service as well. (iv) Site formation and clearance, excavation, earthmoving and demolition services are attracted only if the service providers provide these services independently and not as part of a complete work such as laying of cables under the road. 3. The taxable status of various activities, on which disputes have arisen. Based on the foregoing, the following would be the tax status of some of the activities in respect which disputes have arisen, S. No. Activity Status 1. Shifting of overhead wires for any reasons such as widening/renovation of roads cables/Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994. 2. Laying of cables under or alongside roads ....
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.... has been defined in section 658 (54) of the Act, which read as follows: "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, Installation, completion, fitting out, improvement, repair, renovation, alteration of any building or structure on land or for carrying out any other similar activity or apart thereof in relation to any building or structure on land; 9.1 Also, w.e.f 01.07.2012, section 65B(44) of the Act defines "service" means any activity carried out by person for another for consideration, and includes a declared service, Also, clause (h) of section 66E specifies service portion in execution of works contract as a 'Declared Service. 9.2 On examination of the scope and nature work undertaken by the party with regard to supply, erection, fixing wiring, construction, installation charging, commissioning, shifting etc. and relocation of electrical lines/poles, towers, transformers, crossing lines etc, as illustrated in the chart above, I find that such service provide....
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....nd UPPCL period prior to 01.07.2012. The party have submitted relevant certificates issued by the Executive Engineer, Electricity Distribution Division, Bhadohi, certifying the details of payments received by the party after July, 2012 to 2013-14 in respect of the job/ work done/ tompleted before 01.07.2012 to substantiate their claim. I have examined the documents submitted by the party. 10.2 In light of the explicit evidence that the payment amounting to Rs. 5,11,12,972.00 received during 01.07.2012 to 31.03.2013, and payment amounting to Rs. 7,93,00,718.00 received during 2013-14 pertains to the service provided by the party to PVVNL and UPPCL during the period period prior to 01.07.2012, I hold that the said amounts shall not be included in the eventual demand. 10.3 In view of the above, I hold that the service tax liability of the party for the period 01.07.2012 needs to be re-computed as under: Period Gross amount received towards providing works contract service (Rs.) Deduction of amounts received after 01.07.2012 in respect of job done prior to 01.07.2012 (Rs.) Net Taxable Value received towards providing works contract ser....
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....ST-3 returns. The party did not furnish correct information to the department. Had the department not examined the records of the party, the party would have succeeded in evading service tax. Therefore, I hold that the present case is a case of deliberate non-declaration and suppression of vital facts from the department with willful intention to evade payment of service tax. Accordingly, I hold that the invocation of the extended period for demand of service tax, under proviso of Section 73 (1) of the Act in this case is fully justified and therefore 1 confirm the demand of service tax (including cess) of Rs. 29,52,418/- under proviso to section 73 (1) of Finance Act, 1994. 11.1 I find it pertinent to mention herein that the Hon'ble CESTAT, in the case of M/s. Ideal Security Vs. CCE, Allahabad [2011 (23) STR 66], while examining identical issues, as involved in the instant case, interalia held: 9. We do agree with the Id. Appellate Authority in the matter of the discrepancy noticed by him in respect of the considerations received and appearing in different manner in two different statutory documents. While the ST 3 return was statutory document under Finance ....
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....ity to pay interest at prescribed rate, for delayed payment of dues, was inescapable as the law did not confer any discretion in the matter of levying interest. From the above it is clear that interest is liable to be paid by the party at appropriate rates under the provisions of Section 75 of the Finance Act, 1994, on the amount of service tax being confirmed. 33:0 Further, 1 find that in the present case, the party has contravened the provisions of Section 68 of the Act read with Rule 6 of the Rules, in as much as they have failed to pay deposit the due amount of service tax with the Government in the time and in the manner prescribed under the law. For the said contravention the party is liable for imposition of penalty under the provisions of Section 76 of the Act. 13.1 I also find that in the present case, the party has contravened the provisions of Section 69 of the Act read with Rule 4 of the Rules in as much as they have not obtained appropriate service tax registration during the relevant period in the manner and time prescribed and are thus liable for imposition of penalty under Section 75A of the Act readwith Section 77 of the Act, ibid. 13.2 F....
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....: 14.0 In view of the foregoing discussion, in conclusion I hold that service tax amounting to Rs. 29,52,418/- is llable to demanded and recovered from the party under proviso to Section 73 (1) of the Finance Act, 1994. I further hold that interest at the appropriate rate is chargeable from the party under Section 75 of the Finance Act, 1994. I also hold that the party is liable for imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. 15.0 Coming to the issue of imposing penalty on the party under the provisions of Section 76 of the Act, I refrain from imposing penalty under Section 76 of the Act in view of the fifth proviso to Section 78 of the Act, inserted vide Finance Act, 2008, w.e.f. 10.05.2008, which reads as under: "Provided also that if the penalty is payable under this section, the provisions of section 76 shall not apply." 4.3 The legal provisions as they existed during the period of dispute are reproduced below: A Prior to 01.07.2012, Section 65(64) of the Finance Act, 1994 defined the management, maintenance or repair" to mean any service provided by- (i) any person under a contract in an agreement; or ....
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....nies Act, 1965 and is a distribution licensee under the Electricity Act, 2003. The business of the assessee is sale of electricity which is wholly regulated by provisions of the Electricity Act. In pursuant of its business, the assessee has to develop and maintain an efficient, coordinated and economical distribution network within its area of supply. To supply electricity to its consumers a network is first created. The assessee established a distribution network for providing connections to consumers within its jurisdiction. The network involves installation, erection, commissioning of transmission towers and connectors for transmitting energy to various consumers for supply of HT & LT electricity and installation of meters to measure consumption of monthly energy. The assessee recovers the charges for these services periodically, an area which is also regulated by law. Revenue initiated proceedings against the assessee for recovery of Service Tax under the taxable head "Erection, Commissioning & Installation Service", defined in Section 65(39a) read with Section 65(105)(zzb) of the Act. The assessee claimed immunity to tax on the basis of Notification No. 45/2010-S.T., dated 20-....
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....led the clear policy choice that levy of Service Tax on activities in relation to the distribution of electrical energy by a distribution agency is exempt from levy of Service Tax. 4. The analysis of the Adjudication Authority in relation to the assessee‟s claim for immunity to Service Tax is predicated on the Notification dated 20-7-2010 vide paragraph 5.1 of the order-in-original under title "Discussion and Findings". The Adjudicating Authority held that the notifications do not exempt the activity/service of installation of various equipments at the consumers premises, as this service is different from and in addition to service of distribution of electricity; that equipment installed by the assessee is not in lieu of hire charges; that the infrastructure (established by the assessee) is used to supply electricity to various consumers and the consumers do not have ownership of the transformers. The contention by the assessee that installation of the various equipment, establishing the network is an essential component of his business of distribution of electricity which is carried out in terms of the provisions of the Electricity Act, 2003 was rejected on the grou....
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....n Co. Ltd., Sunil Hi-Tech, Suraj Constructions, V.B. Bhike, etc. for transmission of electricity. Vide Notification 45/2010-S.T., all taxable services rendered 'in relation to' transmission and distribution of electricity have been exempted from the purview of Service Tax. The expression 'relating to' is very wide in its amplitude and scope as held by the Hon'ble Apex Court in Doypack Systems P. Ltd. - 1988 (36) E.L.T. 201 (S.C.). Therefore, all taxable services rendered in relation to transmission/distribution of electricity would be eligible for the benefit of exemption under the said Notification for the period prior to 27-22010. 6. As regards the demand for the period w.e.f. 27-22010, the said exemption is available if the taxable services are rendered for transmission of electricity. As held by the Hon'ble Apex Court in the case cited supra the expression "for" means 'for the purpose of'. As per the definition of transmission (given in the Electricity Act, 2003), it covers a very wide gamut of activities including sub-station and equipments. Therefore, the various activities undertaken by the appellant, though classifiable under Commerc....
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....ment hereby directs that the service tax payable on said taxable services relating to transmission and distribution of electricity provided by the service provider to the service receiver, which was not being levied in accordance with the said practice, shall not be required to be paid in respect of the said taxable services relating to transmission and distribution of electricity during the aforesaid period. [Notification No. 45/2010-S.T., dated 20-7-2010] Thus, the service tax payable on all services relating to transmission and distribution of electricity provided by the service provider to the service recipient is not required to be paid. We have seen the related contracts entered by the appellant with M/s. UPCL. It is evident from there that the service rendered by the appellant is squarely relating to transmission and distribution of electricity and therefore in the light of the Notification No. 45/2010-S.T., dated 207-2010 no service tax is recoverable in respect thereof. Indeed CESTAT in the case of NOIDA Power Co. v. CCE, NOIDA [2014 (33) S.T.R. 383 (Tri.-Del.)] has beld that "the expression 'in relation to' is of wide import and indicates all act....
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....o do, hereby exempts the taxable service provided to any person, by a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003 (36 of 2003), for distribution of electricity, from the whole of Service Tax leviable thereon under section 66 of the said Finance Act." Thus, the exemption provided in earlier Notification No. 45/2010-S.T., dated 20-7-2010 for services provided in relation to distribution of electricity upto 21-6-2010 have been further continued vide Notification No. 32/2010-S.T., dated 22-6-2010. In consequence, the demand of tax liability beyond 21-6-2010, on the appellant, for 2011-12, also cannot sustain. Accordingly, appeal is allowed with consequential benefits, if any, as per law." 4.5 As we find that the issue for the period prior to 01.07.2012 is squarely covered by the above referred decisions, we do not find any merits in the appeal filed by the revenue. 4.6 In respect of period post to 01.07.2012 we find that from this date the scheme of taxation has been changed and services provided are taxable unless and until exempted or covered by the negativ....
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.... appellant are "work contract service", we find that while granting the benefit of exemption under this notification, the bench was not seized with the matter wherein the service recipients were other than government organizations or local authority. As such on this ground this order of Chandigarh Bench is distinguishable. 4.9 The decision of the Ahmedabad bench in case of Gujarat Energy Transmission Corporation limited, is also distinguishable for the reason that the said case is in respect of the power supply company itself and not in case of the person providing certain services to the clients of such company. 4.10 Commissioner has dully analyzed the definition as it existed before and after 01.07.2012 and he concluded that the services provided by the appellant are in nature of Work Contract Services both prior and post of 01.07.2012. However, vide Notification No.11/2010, 32/2012, 145/2012 referred earlier these services has to be held exempted till 01.07.2012 similar exemption notification do not accept post to 01.07.2012. Hence, order of Commissioner for period post to 01.07.2012 cannot be faulted with. 4.11 While keeping the demand higher gr....