The Chandigarh bench of the Customs, Excise & Service Tax Appellate Tribunal has held that the tax exemption is available on services rendered for transmission of electricity and quashed the demand for service tax.
M/s KEC International Ltd, the appellant has filed appeals to assail the orders dated 31.01.2013 and 10.09.2013 passed by the Commissioner, Central Excise, whereby the demands of service tax have been confirmed with the penalty.
The appellant engaged in the manufacture of power transmission towers and parts and accessories. The appellant also engaged in the supply of such towers, parts and accessories and erection, commissioning and installation of such towers. It was allotted two separate contracts by various Electricity Distribution Authorities.
The appellant discharged excise duty and VAT on the sale price of the parts of towers sold to EDAs under the first contract. For the second contract, the appellant was using materials such as concrete, reinforcement steel, nuts, bolts etc. and was discharging its service tax liability under works contract services.
The department issued a show cause notice dated 03.05.2012 for the period 01.06.2007 to 31.03.2011 alleging that the value of towers/parts supplied by the appellant under the first contract should have been added to the value of the second contract for determining the service tax liability.
The appellant stated that the service for transmission of electricity was exempted for the entire relevant period by the notification dated 20.07.2010 and the notification dated 27.02.2010 and no service tax was payable as these activities are towards the erection of transmission lines.
It was observed that since the exemption is available if the taxable services are rendered for transmission of electricity, the expression “for” would cover a very wide gamut of activities and the activities undertaken by the appellant would be eligible for the benefit of a notification.
A Coram comprising Justice Dilip Gupta, president Mr P Anjani Kumar, member (technical) held that the appellant is entitled to the benefit of both the notifications dated 20.07.2010 and 27.02.2010 and set aside the impugned orders dated 31.01.2013 and 10.09.2013 passed by the Commissioner.
The appeal filed by the assessee was allowed. Shri B.L. Narasimhan, Ms Krati Singh and Ms Priyanka Singla, Advocates appeared for the Appellant and Shri Saurav Goel, Special Counsel and Shri Bhasha Ram appeared for the Department.
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