ST - Taxable services relating to transmission of electricity are exempted by s.11C notification 45/2010-ST -Board has clarified that notification would apply to all pending cases - Demand set aside and appeal allowed: CESTAT
By TIOL News Service
KOLKATA, APRIL 26, 2015: THE Assessee-Appellant, West Bengal State Electricity Transmission Company Limited (WBSETCL) is engaged in transmission of electricity in the State of West Bengal. M/s. West Bengal Electricity Distribution Company Limited (WBSEDCL), who were engaged in distribution of electricity in the State of West Bengal, received power from generating companies by utilizing the transmission network of M/s. WBSETCL.
A SCNwas issued to the Assessee-Appellant alleging that the services rendered by them, for the period 01.04.2007 to 31.03.2009, are classifiable under the category of 'Business Support Service' and demanding service tax of Rs.134crores. On adjudication, the Commissioner of Service Tax, Kolkata dropped part of the demand of Service Tax of Rs.14.95croresand confirmed the demand of Rs.118.70croresand imposed penalty of equal amount u/s 78; penalty of Rs.5,000/- u/s 77 of the FA, 1994.
Both, the assessee and the Revenue, are in appeal before the CESTAT against the portion of the order not favourable to them.
At the outset, the appellant submitted that by virtue of Notification No.45/2010-ST dated 20.07.2010, the Central Government, in exercise of the power conferred under s. 11C of the CEA, 1944 r/w s. 83 of the Finance Act, 1994, directed that no service tax shall be required to be paid in respect of taxable services relating to transmission and distribution of electricity for the period up to 21.06.2010 and the period involved in their case is covered by the notification.
For defending their Rs.134crores case, the department had appointed a Special Counsel. Although the referred notification was not disputed by the Special Counsel, it was submitted that in view of the apex court decision in Connaught Plaza Restaurant (P) Ltd. - 2012-TIOL-114-SC-CX a Notification under Section 11C of the CEA, 1944 would not wipe out the liability of the pending proceedings against an assessee. That, on the direction of the Bench, the Revenue had referred the matter to the CBEC for necessary instruction and it was informed by the OSD, CBEC (Judicial Cell) vide letter dated 25.08.2014 that the observation of the Supreme Court in the case of Connaught Plaza Restaurant ( supra ), cannot be inferred as a ruling/precedent as the subject matter was not that of exemption under Section 11C of CEA,1944 but that of classification of 'soft-serve' as ice-cream and consequently, the Notification No.45/2010-ST dated 20.07.2010, would be applicable to all pending cases.
The Bench after considering the submissions and extracting the contents of the notification 45/2010-ST observed that the said Notification has been interpreted by the Tribunal in the case of M.P.Power Transmission Co. Ltd. and later followed in the case of Noida Power Co.Ltd. wherein it has been held that no service tax is required to be paid for rendering services in relation to transmission and distribution of electricity during the period mentioned in the said Notification; that the Bench has no reason to disagree with the said decisions of the co-ordinate Bench of the Tribunal; moreover, in view of the clarification issued by the Board, the Appellant-assessee are eligible to the benefit of the said Notification.
The order to the extent of confirming the demand against the Appellant was set aside and the Appeal filed by the Assessee-Appellant was allowed. Consequently, the Revenue's Appeal was held as being devoid of merit and accordingly dismissed.
In passing : Also see 2012-TIOL-1169-CESTAT-DEL, 2012-TIOL-1175-CESTAT-DEL & 2012-TIOL-1194-CESTAT-BANG .
(See 2015-TIOL-739-CESTAT-KOL)
