By TIOL News Service

BANGALORE, FEB 06, 2014: AT the stage of disposal of the stay application, having regard to the facts and circumstances of this case, with the consent of both sides appeal taken up for final disposal.

The petitioner provided a raft of taxable services to the Central Power Distribution Company of Andhra Pradesh and other State distribution companies. Among the taxable services provided were

1. 'management, maintenance or repair service' involving manning and maintenance of sub-stations;

2. 'erection, commissioning or installation service' for erection of electrical lines of different capacities and transport of material from one location to another including - erection of sub-stations and allied services;

3. transport of goods by road for transport of failed/repaired transformers and other material of the distribution companies;

4.  rent-a-cab operator service, provided to the distribution companies for transport of their personnel;

5.  Business Auxiliary Service by establishing' Customer Service Centres on behalf of distribution companies; and

6.  'manpower recruitment and supply agency service', by supply of semi-skilled labour for attending to maintenance works in the sub-divisions of the distribution companies.

The singular defence urged by the appellant before the adjudicating authority was that these services were provided to instrumentalities of the State; no service tax was collected; as and when the service tax component is remitted by the service recipients, the appellant would remit the service tax

The Tribunal found this defence as fundamentally misconceived and rightly negated by the adjudicating authority.

It was however brought to the notice of the Tribunal that the Central Government by Notification No. 45/2010-ST dt. 20/07/2010, in exercise of powers conferred by Section 11 C of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, granted immunity from the 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.

The Notification reads as:

Whereas, the Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), under section 66 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as ‘ the Finance Act'), on all taxable services relating to transmission and distribution of electricity provided by a person (hereinafter called ‘ the service provider') to any other person (hereinafter called ‘ the service receiver'), and that all such services were liable to service tax under the said Finance Act, which were not being levied according to the said practice during the period up to 26th day of February, 2010 for all taxable services relating to transmission of electricity, and the period up to 21st day of June, 2010 for all taxable services relating to distribution of electricity;

Now, therefore, in exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944), read with section 83 of the said Finance Act, the Central Government hereby directs that the service tax payable on said taxable services relating to transmission and distribution of electricity provided by the service provider to the service receiver, which was not being levied in accordance with the said practice, shall not be required to be paid in respect of the said taxable services relating to transmission and distribution of electricity during the aforesaid period.

The Tribunal held, "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. On this premise, the appeal requires to be allowed and is accordingly allowed. The impugned adjudication order dt. 20/04/2011 is declared inoperative in the light of Notification No. 45/2010- ST dt. 20/07/2010."

(See 2014-TIOL-187-CESTAT-BANG)