TaxTMI 
TaxTMI 
2026 (3) TMI 1371
X X X X Extracts X X X X
X X X X Extracts X X X X
....ur on a man-day basis for handling movement of men and materials and for safeguarding offices, stores and vehicles (Supply of Manpower Service). These activities were attracting service tax under the reverse charge mechanism with effect from 01.07.2012 in terms of section 68(2) of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012. As service tax was not paid, a letter dated 24.06.2013 was issued seeking details, followed by a summons dated 10.12.2013. In response, the appellant's authorised officer appeared on 03.01.2014 and admitted non-registration and non-payment of service tax. Consequently, a show cause notice (SCN), dated 17.07.2015 was issued proposing recovery of duty with interest and penalties under sections 76, 77 and 78. The Adjudicating Authority confirmed the demand with interest, appropriated the tax paid, and imposed penalties, leading to the present appeal. 3. The Ld. Advocate Shri V. Ravindran appeared for the appellant and Ld. Authorized Representative Shri Sanjay Kakkar appeared for the respondent. 3.1 Shri V. Ravindran Ld. Counsel for the appellant, submitted a Table giving a snap shot of the dispute, which is reproduced below: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notifications which consistently hold that all services "for" or "relating to" transmission and distribution of electricity are exempt, including during the Negative List and GST regimes. The expressions "for" and "relating to" have been accorded wide amplitude by courts and tribunals. G. All disputed services were essential, integrally connected, and exclusively used for transmission of electricity, and therefore squarely covered by the exemptions and Section 66D. He relied on the following judgments in support of his averments: CITATION FACTS DECISION Kedar Constructions v. CCE 2014 (11) TMI 336 - CESTAT MUMBAI 5. We notice that out of the total demand confirmed of Rs. 2,04,14,368/- bulk of the demand of Rs. 1,90,47,124/- pertains to Commercial or Industrial Construction service rendered to Maharashtra State Electricity Transmission Co. Ltd., Maharashtra State Electricity Distribution Co. Ltd., Sunil HiTech, Suraj Constructions, V.B. Bhike, etc. for transmission of electricity. Vide Notification 45/10-ST, all taxable services rendered 'in relation to' transmission and distribution of electricity have been exempted from the purview of service tax. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... liability to remit service tax in respect of any taxable service provided in relation to transmission and distribution of electricity, during the period upto 26/02/2010. As consequence of this immunity Notification, the service tax liability of the petitioner for the several taxable services provided to electricity distribution companies of Andhra Pradesh during 01/04/2004 to 30/11/2009, stands eclipsed. Paschimanchal Vidyut Vitran Nigam Ltd. v. CCE 2012 (8) TMI 688 CESTAT NEW DELHI ... apart from transmission of electricity, the appellant assessee was also engaged in the business of "erection, commissioning and installation" as also "technical testing and analysis" which according to the department, were subject to levy of service tax ... 14. ... any activity or service like erection, commissioning and installation of meters as also technical testing and analysis can easily be termed as the service relating to the transmission and distribution of electricity provided by the service provider to the service receiver. Thus, in our considered view such service, which is subject matter of this appeal, would be squarely covered under the exemption. Noida Power Company Ltd. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r No. 123/5/2010-TRU, dated 24-5-2010 proper. [para 5] MD Aub Khan Vs CC, CEx, & ST, Guntur 2015(40)STR 267 (Tri.Bang.) Demand - Service Tax - Manpower Supply Service - Transmission and distribution of electricity - Exemption Notification No. 45/2010-S.T., eligibility - Appellant providing manpower supply services to a company exclusively engaged in providing transmission and distribution of electricity - Impugned notification exempting all services provided in relation to transmission and distribution of electricity, services provided by appellant fully exempt - Denial of exemption on ground that service was provided prior to transmission and distribution of electricity, not tenable - Nothing in impugned notification to hold so - Demand not sustainable. [paras 2, 3] Hyderabad Power Installations (P) Ltd. Vs CCCE, C. & ST., Hyderabad II [2016(45) STR 217 (Try.Hyd.)] Erection, Commissioning or Installation Services (ECIS) - Service Tax - Notification No. 45/2010-S.T., dated 20-7-2010 clarified that no Service Tax required to be paid for all services relating to transmission of electricity upto 26-2-2010 and for all services relating to distribution of electricity upto 21....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x under category of Erection, Commissioning and Installation Service in Section 65(105)(zzd) of Finance Act, 1994 on various charges recovered by assessee from consumers, and Service tax to extent of 50% under reverse charge on works contract service received by assessee - HELD : Assessee provided these services in relation to transmission of electricity which was exempted for relevant period under Notification Nos. 45/2010-ST, dated 20-7-2010, 11/2020-ST, dated 27-2-2010 and as per negative list under Section 66D of Finance Act, 1994 - Hence, demand was to be set aside and appeals were allowed - Section 65(105)(zzd) read with Section 66 of Finance Act, 1994. [para 6] Demand and recovery (Service Tax) - Limitation period - Extension of period - To demand interest on Cenvat credit reversed without utilisation, show cause notice was issued on 20-10-2014 for periods 2009-10 to 2012-13 invoking extended period - However, there was no suppression of facts on part of assessee - HELD : For demand of interest, longer period could not be invoked - Section 73 of Finance Act, 1994. [para 7] H. Further, the Show Cause Notice issued on 17.07.2015 covers a period partly beyond the no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n led to show that the appellant took all reasonable precautions, hence the SCN invoking the extended period was valid. He further stated that the judgments cited by the appellant, mostly relate to the pre-negative list period and are not relevant in deciding the case. The Ld. A. R. prayed that the appeal may be rejected. 4. Heard the parties and perused the appeals and connected documents. 5. The dispute relates to the period from 01.07.2012 to 31.03.2014, after the introduction of the Negative List, as set out in Section 66D of the Finance Act, 1994. The relevant potions of the concerned sections are reproduced below: SECTION 66B. Charge of service tax on and after Finance Act, 2012.- There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen percent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. ***** ***** ***** SECTION 66D. Negative list of services.- The negative list shall comprise of the following services, namely :- *****....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reof as may be required to accommodate such transformers, switch-gear and other works. c. As per section 2(19) "distribution system" means the system of wires and associated facilities between the delivery points on the transmission lines or the generating station connection and the point of connection to the installation of the consumers; d. As per section 2(77), "works" includes electric line, and any building, plant, machinery, apparatus and any other thing of whatever description required to transmit, distribute or supply electricity to the public and to carry into effect the objects of a licence or sanction granted under this Act or any other law for the time being in force. e. As per Rule 4 of the Electricity Rules 2005 - "Distribution System" - The distribution system of a distribution licensee in terms of sub-section (19) of Section 2 of the Act shall also include electric line, sub-station and electrical plant that are primarily maintained for the purpose of distributing electricity in the area of supply of such distribution licensee notwithstanding that such line, sub-station or electrical plant are high pressure cables or overhead lines or asso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....smission and distribution of electricity extended under relevant notifications. 13. Thus, the reason for saying that supply of electricity meters for hire to consumers is covered by the exemption notification is that such service is an essential activity having direct and close nexus with transmission and distribution of electricity. This circular only provides an interpretation of when a service would stand included in another service, namely, when such service is an essential activity having direct and close nexus with the exempted activity. Therefore, the fact that the exemption notifications came to be rescinded would have no bearing inasmuch as the circular only clarifies what according to the Government of India would stand included in another service. Such interpretation would not change merely because such exemption is now granted under some other provision. 14. It may be noted that insofar as the exemptions prior to the negative list regime as well as post the negative list regime are concerned, it is the transmission and distribution of electricity that has been exempted by virtue of notifications. During the negative list regime, transmission and distri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....same services as against the clarification issued for the pre-negative list regime. 15. Thus, from the very manner in which the respondents have treated the services related to transmission and distribution of electricity during the pre-negative list regime, such services would stand covered by the exemption granted to transmission and distribution of electricity by virtue of inclusion of such services in the list of negative services under section 66D (k) of the Finance Act as well as by virtue of exemption notification issued under the CGST Act. 16. Examining the issue from the alternative argument advanced on behalf of the petitioners, if related services are per se not covered within the ambit of transmission and distribution of electricity, the question that next arises for consideration is whether such services would fall within the ambit of bundled services as contemplated under section 66F (3) of the Finance Act and within the ambit of "composite service" as defined under section 2 (30) of the CGST/SGST Acts, and, therefore, liable to be taxed at the rate of the principal supply. Another question is whether section 66F (3) of the Finance Act would cover ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Jodhpur Vidyut Vitran Nigam Ltd Vs UoI [2021 (2) TMI 557], while examining the taxability of services under CGST, such as application fees, meter rentals, testing charges, labour charges for shifting meters/service lines, and charges for duplicate bills, as clarified by the Board vide Circular dated 01.03.2018, expressly concurred with the view of the Hon'ble Gujarat High Court in Torrent Power Ltd. (supra). 8. The issue examined by the High Courts was whether services relating to transmission and distribution of electricity are covered under section 66D(k) of the Finance Act and hence exempt. It was held that during the pre-negative list regime, such services were consistently exempted by notification. Circular No. 131/13/2010-ST dated 7.12.2010 clarified that supply of electricity meters on hire, being an essential activity having a direct and proximate nexus with transmission and distribution, is covered by the exemption. Mere rescinding of exemption notifications does not alter this position, as the circular only clarifies the scope of the exempt service. The revenue, having earlier accepted such services as exempt, cannot subsequently take a contrary stand in the absenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vity → Works contract Service Supply of Manpower Service Rent-a-cab service Whether it answers ↓ Whether it relates to transmission of electricity Yes, relates as the same is erection, commission of towers, tower lines and sub-stations, construction of buildings and structures and related works at the sub-station under their supervision. Yes, it relates Yes, it relates Whether it is for the purpose of transmission of electricity Yes, it is for the purpose Yes, it is for the purpose Yes, it is for the purpose Whether the service is rendered by a person authorized to distribute power Yes, it is by an utility under Electricity Act, 2003. Yes, it is for the purpose Yes, it is for the purpose 12. As discussed above, the issue being examined pertains to an entity-specific exemption for a specified activity, for which tax is demanded under partial reverse charge basis. 'Works contract services' relating to erection, commissioning, installation and dismantling of transmission towers, lines and substations, as well as construction and allied works at substations, are indispensable for transmission and distribution of e....