Service Tax Not Leviable On Service For Transmission Of Electricity By GETCO: CESTAT

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not leviable for the erection of bays, substations, and transmission lines provided by Gujarat Energy Transmission Corporation Limited (GETCO) to service recipients.

The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has observed that for the entire period in the appeal, i.e., related to Notification No. 45/2010-ST, 11/2010-ST, and also for the period when the negative list under Section 66D was in force, it was held that service for transmission of electricity is not leviable to service tax.

The appellant/assessee is a Gujarat Government Company and is notified by the Government of Gujarat as a State Transmission Utility in the State of Gujarat in terms of Section 2 (67), read with Section 39(1) of the Finance Act, 1994, and in terms of the Electricity Act 2003.

As a state transmission utility, the appellant undertook the transmission of electricity in the state of Gujarat. For the purpose of transmission of electricity, the erection of bays, substations, and transmission lines is required to be carried out.

The appellant recovered from the consumers various charges, such as erection charges, contingency charges, supervision charges, development charges, etc., for the erection of bays, substations, and transmission lines that are required for the transmission of electricity.

The appellant receives work contract service from EPC contractors for the erection of bays, substations, and transmission lines. The appellant was served two show cause notices for the period 2009-10 to 2012-13 and 2013-14 demanding service tax on various charges recovered by the appellant from the consumers for the erection of bays, substations, and transmission lines under the category of erection, commissioning, and installation service under Section 65(zzd) of the Finance Act, 1994. The department also demanded service tax to the extent of 50% under reverse charge on work contract service received by the appellant. The show cause notice also demanded interest on Cenvat credit, which was never utilized by the appellant. After considering the reply, the Commissioner, by two orders-in-original, confirmed the show cause notices against which the two appeals are preferred by the appellant.

The appellant submitted that all the services provided by the appellant are in relation to the transmission of electricity; accordingly, they are exempted via Notification No. 45/2010-ST dated 20.07.2010 for the period up to 27.02.2010 and for the period from 27.02.2010 via Notification No. 11/2010-ST dated February 27, 2010, and the services are not taxable from July 1, 2012, in view of the negative list of services under Section 66D of the Finance Act, 1994. Taking of the credit and its reversal clearly reflected in the record, suppression of facts or willful misstatement with an intention to evade payment of duty cannot be alleged, and hence a longer period of limitation is not applicable, and therefore, demand for interest must fall.

The issue raised was whether services, namely the erection of bays, substations, and transmission lines, provided by the appellant to the service recipient are liable for service tax.

The tribunal noted that in terms of Notification No. 45/2010-S.T., all taxable services relating to transmission and distribution of electricity provided by any service provider are not taxable for periods up to 26-2-2010 and up to 21-6-2010, respectively, for services relating to transmission and distribution of electricity.

Counsel For Appellant: JC Patel and Rajul Gajera

Counsel For Respondent: Tara Prakash

Case Title: Gujarat Energy Transmission Corporation Limited Versus Commissioner of Central Excise & ST, Anand

Case No.: Service Tax Appeal No. 10317 of 2017-DB

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