By TIOL News Service

MUMBAI, MAY 22, 2014: THE applicants had undertaken the work allotted by Maharashtra State Electricity Transmission Company Ltd. and M/s. Power Corporation of India Ltd. in respect of construction of foundation walls for sub-station or control rooms, foundation for electricity tower etc.

On this activity, the CCE, Kolhapur has confirmed a service tax demand of more than Rs.1.99 crores.

Before the CESTAT, the applicant submits that this activity is exempted from payment of service tax by the section 11C Notification No. 45/2010-ST dated 20.7.2010. Inasmuch as this Notification exempts from payment of service tax in respect of all taxable services relating to transmission of electricity upto 26.2.2010. Furthermore, in terms of Notification No. 11/2010-S.T. dated 27.2.2010 exemption is granted to service provided to any person for transmission of electricity. The applicant, therefore, submits that the demand of more than Rs.1.99 crores is not sustainable. They also rely on the decision in the case of Shri Ganesh Enterprise vs. CCE & ST - 2014-TIOL-187-CESTAT-BANG.

In the matter of the service tax demand component of Rs.1.36 lakhs, the applicant submitted that the same is in respect of construction of Hostel and Synthetic Track and since it is not a commercial or industrial construction service, it is not sustainable. So also, they have already deposited Rs.18.54 lakhs during investigation.

The Revenue representative submitted that Notification No. 11/2010-S.T. dated 27.2.2010 only exempts the taxable service provided to any person for transmission of electricity and not construction activity undertaken.

The Bench observed that the major portion of the confirmed demand is in respect of the activities such as construction of sub-station, control rooms, foundation walls for sub-station, modification of control room, putting & fixing up aluminium panels at sub-stations etc. and Notification No. 45/2010-ST provides exemption to all taxable services relating to transmission of electricity till 26.2.2010.

In the matter of the demand on the said services for the period after 26.02.2010, it was informed by the applicant that the same came to Rs.11 lakhs approximately and they had already deposited Rs.18.54 lakhs during investigation.

In respect of the demand on the construction of hostel for women and Synthetic Track in the University, the CESTAT observed that prima facie the activity is not commercial.
Holding that the amount already deposited is sufficient for hearing of the appeal, the pre-deposit of the adjudged dues was waived and the recovery stayed.

In passing: As to why the adjudicating authority ignore the s.11C notification issued in the year 2010 is electrifying to say the least.

(See 2014-TIOL-829-CESTAT-MUM)