The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that no Service Tax payable on services provided to Government Company for ‘transmission of electricity.
The appellants, M/s. Vivek Constructions, M/s. Shree Ram Construction Co. is registered with the Service Tax Department and is engaged in providing works contract services, inter alia, to Rajasthan Rajya Vidyut Prasaran Nigam Ltd., a State PSU (RRVPNL). It appeared to Revenue that the appellant has not paid or short paid service tax for the taxable services provided during the period 2010-2011 to 2014-2015 and thus, the short paid tax is Rs.7,75,082/-. On requisition, the Revenue received the details of payment made to various contractors, including the appellant, from RRVPNL.
It further appeared that in terms of Section 68(1) read with Section 68(2) read with Notification No.30/2012-ST, Sl.No.9 of the Notification provides that in respect of services provided or agreed to be provided, service portion in the execution of the works contract – 50% of the service tax is payable by the person providing services and balance 50% is payable by the person receiving the services. Further, it appeared that the appellant had not taken registration earlier for payment of tax and filing the returns, and have taken registration subsequently on 18.12.2013. Accordingly, by show cause notice dated 23.10.2015, service tax of Rs.7,75,082/- was demanded for the period 2010-2011 to 2014-2015, invoking the extended period of limitation along with interest, and a further penalty was proposed.
The appellant, inter alia, urged that exemption notification no.11/2010-ST dated 27.12.2010 provides that the services provided by any person to any other person for ‘transmission of electricity is exempt from service tax. They have provided services to RRVPNL, which is engaged in the transmission of electricity. Further, reliance was placed on notification no.45/2010-ST dated 20.07.2010, which provided ‘retrospective exemption’ for all taxable services in relation to the ‘transmission and distribution of electricity.
The coram of Judicial Member, Anil Choudhary held that no case of contumacious conduct or conscious breach of law is made out in the facts and circumstances. Revenue has raised the demand in the show cause notice, which has been found to be misconceived by the Commissioner (Appeals), as the appellant was entitled to exemption. Further, the services rendered to the Government Companies post 30.06.2012, being of non-commercial nature, was also exempt under Notification No.25/2012-ST. In this view of the matter, all the demands of tax and penalties are fit to be set aside.
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