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2019 (7) TMI 503

ice tax w.e.f. 1.7.2003 - demand alongwith interest and penalty - period 1.7.2003 to 9.9.2004 - demand under Works contract service for the subsequent period - Change in classification of services - Scope of SCN. HELD THAT:- The Appellants during this period were engaged in the erection of transmission towers. The facts of the case show that the Appellant during the relevant period, were engaged in the supply of electricity transmission towers as well as rendering services of erection of the same. Such services would undoubtedlymerit classification under Works Contract Service. From the assessment order passed by the VAT authorities for the impugned period, it is found that the Appellant’s services were classified under Works Contract under Gujarat VAT. The Hon’ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] has held that Works contracts are not liable for service tax for the period prior to 01.06.2007. Also by virtue of Notification No. 45/2010-ST dated 20.7.2010, exemption was granted from payment of service tax to any service in relation to transmission and dist .....

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TA, 1985, for which they held central excise registration. They were issued Show cause notice dated 27.01.2005 alleging that the Appellant is engaged in testing, erection and commissioning of Tower line at the site of various State Electricity Boards, M/s Power Grid Corporation of India Ltd and Foreign bodies. These Customers place orders on contract basis for supply and erection separately. The contracts are on open tender system obtained through International Competitive Bidding and Domestic Comparative Bidding. The Appellant is collecting erection and commissioning charges which were shown under job work receipts and the same are chargeable to service tax w.e.f. 1.7.2003. Consequently, a service tax demand of ₹ 15,35,83,991/- for the period 1.4.1999 to 9.9.2004 under Section 73 (a) of the Finance Act, 1994 was proposed on the ground that the services provided by the Appellant to their customers should be considered as taxable under the category of Consulting Engineer and the fees / charges for erection, testing and commissioning are to be considered as taxable value. Though the adjudicating authority vide impugned order dated 20.9.2010 held that for the period 1999 to 30.6 .....

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under the definition of commissioning and installation service during the impugned period. He also relies upon the CBEC Circular No. 123/5/2010-TRU dated 24.05.2010 to submit that erection, commissioning and installation of transmission towers will not result into any category of taxable service. He also relies upon the Tribunal judgment in case of Aakriti Construction - 2017 (7) GSTL -478 (Tri.). He further submits that the Revenue authorities have accepted the classification under the category of construction service and w.e.f. 1.6.07 as Works Contract service for the same activities for subsequent period. Therefore, the demand under the impugned category is not correct. He also submits that the demands are beyond the scope of show cause notice as the demand was proposed under the category of Consulting Engineer whereas the same has been confirmed under erection & commissioning Services and hence not sustainable. He relies upon the judgments in case of Ballarpur Industries - 2007 (215) ELT 489 (SC) and Gas Authority of India Ltd - 2008 (232) ELT 7 (SC). 4. Shri Sameer Chitkara, Ld. Additional Commissioner (AR) appearing for the Revenue supports the impugned order and submits .....

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e legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter. This construction, in our considered view, amounts to supplementing the charging section by including something which the provision does not state. The construction placed on the said provision does not flow from the plain language of the provision. The proviso requires the exempted property to be subjected to tax and for the purpose of valuing that property alone the value of the other properties is to be taken into consideration. But, if in doing so, the said property becomes taxable, the Act does not provide at what rate it would be taxable. One cannot determine the rateable value of the small property by aggregating and adding the value of other properties, and arrive at a figure which is more than possibly the value of the property itself. Moreover, what rate of tax is to be applied to such .....

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the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each head of income. No doubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computation provision at all if a certain interpretation is pressed on the charging provision. That pertains to the fundamental integrality of the statutory scheme provided for each head. (at para 10) 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts .....

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virtue of subject Notification. Further in case of Noida Power Co.Ltd - 2014 (33) STR 383 (Tri, Del), the Tribunal has held as under : 2. The assessee is a company, registered under the Companies Act, 1965 and is a distribution licensee under the Electricity Act, 2003. The business of the assessee is sale of electricity which is wholly regulated by provisions of the Electricity Act. In pursuant of its business, the assessee has to develop and maintain an efficient, coordinated and economical distribution network within its area of supply. To supply electricity to its consumers a network is first created. The assessee established a distribution network for providing connections to consumers within its jurisdiction. The network involves installation, erection, commissioning of transmission towers and connectors for transmitting energy to various consumers for supply of HT & LT electricity and installation of meters to measure consumption of monthly energy. The assessee recovers the charges for these services periodically, an area which is also regulated by law. Revenue initiated proceedings against the assessee for recovery of Service Tax under the taxable head Erection, Commiss .....

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ion notification), by the immunity to tax cover. 3. In issuing Exemption Notification dated 22-6-2010 read with the Notification No. 45/2010-S.T., dated 20-7-2010, the Central Government signalled the clear policy choice that levy of Service Tax on activities in relation to the distribution of electrical energy by a distribution agency is exempt from levy of Service Tax. 4. The analysis of the Adjudication Authority in relation to the assessee s claim for immunity to Service Tax is predicated on the Notification dated 20-7-2010 vide paragraph 5.1 of the order-in-original under title Discussion and Findings . The Adjudicating Authority held that the notifications do not exempt the activity/service of installation of various equipments at the consumers premises, as this service is different from and in addition to service of distribution of electricity; that equipment installed by the assessee is not in lieu of hire charges; that the infrastructure (established by the assessee) is used to supply electricity to various consumers and the consumers do not have ownership of the transformers. The contention by the assessee that installation of the various equipment, establishing the netwo .....

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(52) STR 309 (Tri,Hy) iv) U.P. RajkiyaNirman Nigam Ltd -2016 (41)STR 967 (Tri, Del) v) Md. Ayub Khan 2015 (40) STR 267 (Tri) vi) Richardson & Cruddas Ltd - 2016 (3) TMI 899 -CESTAT,Mum vii) Narsimha Engineering Works - Final order No. A/87075/2018 dated 16.7.2018, CESTAT, Mumbai We also find that during the impugned period, the activity of only commissioning and installation was taxable and only from 10.9.2004, the services of erection were included /adduced to commissioning and installation service so as to make the same taxable. The same is explicit from the CBEC Circular No. 59/8/2003-ST dated 20.6.2003 wherein the Board has viewed as under :- Commissioning and Installation Services : In case of commissioning and installation, it h commissioning and installation as been pointed out that in case of turnkey project, the contract may be indivisible and no separate value could be assigned to commissioning and installation of goods. Doubts have also been raised as to what would be the value of taxable service. It is submitted that it has been provided in law that service tax is leviable on erection and commissioning charges only and not on the material and goods supplied. However .....

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n electrical or electronic device (i.e. a machine or equipment that uses electricity to perform some other function), the same is outside the purview of this taxable service. 3. The taxable status of various activities, on which disputes have arisen : Based on the foregoing, the following would be the tax status of some of the activities in respect which disputes have arisen : S.No. Activity Status 1 Shifting of overhead cables / wires for any reasons such as widenikng / renovating of roads Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 2 Laying of cables under or along wide roads Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 3 Laying of electric cables between grids / sub-stations /transformer stations en route Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994 4 Installation of transformer / sub-stations undertaken independently Taxable service, namely erection, commissioning or installation services (section 65 (105) (zzd) 5 Laying of electric cables upto distribution point of residential or commercial localities / complexes Not .....

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