Taxable Services provided in relation to Transmission of Electricity are exempted under CBIC notification: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that taxable services provided about the transmission of electricity are exempted under CBIC notification.

J S Kataria, the appellant is a proprietor of a proprietorship firm of M/s. Bhumi Construction during the period financial year 2004-05 to 2008-09 provided services to various principal contractors who were primarily engaged in executing government contracts forthe erection, commissioning, installation or construction of power transmission towers.

The appellant mainly carried out various works/services forthe transmission of electricity namely concrete foundation, excavation of pits, establishment and maintenance of the site for storage of materials relating to the power transmission tower in the capacity of the sub-contractor. The appellant has not discharged the service tax liability on the service provided to their main/principal contractor.

As regard non-payment of service tax, a show cause notice dated 08.09.2009 came to be issued raising the demand of service tax amounting to Rs. 1,17,30,336/- along with interest and penalty invoking an extended period of limitation of sub-section (1) of section 73 of Finance Act, 1994 which was confirmed by the adjudicating authority.

It was contended by the appellant that there is no clandestine activity as complete records have been maintained in the normal course of the activity undertaken by the appellant. The non-payment of service tax is on account of the belief that no service tax was payable on the activities undertaken by the appellants. He submits that the appellant had a bonafide belief given the various decisions, the services provided by them are not taxable activity.

The CESTAT consisting of Mr Ramesh Nair, member (judicial) and Mr Raju member (technical) observed that all the services provided in relation to the transmission of electricity are exempted under notification no.45/2010-ST therefore the demand is not sustainable on merit. Vide circular dated 23.08.2007, the C.B.I.C has clarified that the sub-contractor is liable to pay the service tax.

The CESTAT viewed that there is no suppression of fact or any mala fide intention to evade payment of service tax on the part of the appellant and the penalties are set aside.

Shri Rahul Gajera, Advocate appeared for the Appellant and Shri Kalpesh Shah, Superintendent appeared for the Respondent.

To Read the full text of the Order CLICK HERE

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