Installation of electricity meters is service relating to transmission and distribution of electricity and is eligible for exemption.

PJ-Case law-2012/13-1558

Case:- PURVANCHAL VIDYUT VITRAN NIGAM LTD.VERSUSC.C.E., ALLAHABAD

Citation:-2013 (30) S.T.R. 259 (Tri. - Del.)

Issue:-Installation of electricity meters is service relating to transmission and distribution of electricity and is eligible for exemption.

Brief facts:-The appellant-assessee is engaged in the purchase of electricity from Uttar Pradesh Power Corporation Ltd. and transmitting it to various consumers within its jurisdiction. The department pursuant to the intelligence received came to know that apart from transmission of electricity, the appellant-assessee was also engaged in the business of "erection, commissioning and installation" as also "technical testing and analysis" which according to the department, were subject to levy of service tax in terms of provisions of Finance Act, 1994 During the enquiry, the appellant-assessee furnished balance sheets for the year 2003-04 and 2004-05 which revealed that income of the appellant-assessee comprised of revenue from, sale of power - less electricity - internal consumption - revenue, subsidies and grants and other income. The department was of the view that the income shown under the head "other income" in the balance sheet for the relevant financial years was in respect of amounts received by the assessee appellant for providing taxable service i.e. "erection, commissioning and installation" as also "technical testing and analysis". Accordingly, based on profit and loss statement, the appellant- assessee was served with show cause notice dated 17-10-2008 raising demand of service tax amount for the period 2003-04 and 2004-05. The only issue for determination in these appeals is whether or not the services provided by the assessee in respect of erection, commissioning and installation as also technical testing and analyses and installation of meters at the premises of electricity consumers would be covered under the exemption benefit provided by Notification No. 45/2010-S.T., dated 20-7-2010.

Appellant’s Contention:-The appellant contested the show cause notice and claiming that the income shown in the statement of account for the years 2003-04 and 2004-05 under the head "other income" comprised of -Interest on loan to staff, Interest on fixed deposits , Amount charged from customers for delayed payment, Rebate for timely payment of Loan/interest, Sale of scrap , Penalty charges from the contractors and suppliers for delay ofwork, Rebate relating to power purchase, Rent income charges from the staff, Ex .E.'55 found of physical verification of stores, Miscellaneous receipts. There cannot be any service tax on any of the above heads of "other income" mentioned above. They further submitted that the allegation in the show cause notice the "other income" is relating only to receipts against taxable services is based on presumption and assumption as the details of "other income" where already given in the audited balance sheet provided by them. On merits the appellant also raised the plea of limitation on the ground that there was no justification for invoking extended period of five years. He further placed reliance upon the Notification No. 45/2010-ST., dated 20-7-2010and submitted that vide this notification Central Government has exempted persons engaged in transmission and distribution of electricity from levy of service tax in respect of taxable service relating to transmission and distribution of electricity retrospectively. Thus, it is pleaded that in view of exemption notification, impugned order confirming demand and imposing penalty is not sustainable in law.

Respondent’s Contention:-The learned AR for the Revenue on the contrary has submitted that benefit of Notification No. 45/2010-ST. would be available to the appellant-assessee only if it is established that the service on which service tax is levied are related to transmission and distribution of electricity. He also submitted that income under the head "other income" detailed in the statement of account of the assessee relates to the services other than transmission and distribution of electricity as such adjudicating authority has wrongly dropped substantial portion of demand raised vide the show cause notice. Learned AR thus argued as to allow the appeal preferred by the department and modify the impugned order to confirm the demand raised in show cause notice.

Reasoning Of Judgment:-After considering the rival submissions and perused the record, we find that this notification exempts the services relating to transmission and distribution of electricity provided by the service provider to the service receiver from the incidence of levy of service tax. Admittedly, the assessee is engaged in transmission and distribution of electricity after purchasing the same from U.P. Power Corporation Limited. Since the assessee is selling electricity to the consumer, in our view for billing the consumer for electricity consumed it is essential to install the electricity meter having capacity to withstand the load provided to the consumer. Thus, any activity or service like erection, commissioning and installation of meters as also technical testing and analysis can easily be termed as the service relating to the transmission and distribution of electricity provided by the service provider to the service receiver. Thus, in our considered view such service, which is subject matter of this appeal, would be squarely covered under the exemption provided under Notification referred to above. We may note that similar view was taken by the coordinate Bench of this Tribunal in the matter of M.P. Power Transmission Company Limited v. CCE, Bhopal [2011 (24) S.T.R. 67 (T)] in relation to interpretation of similar exemption Notification No. 11/2010-S.T., dated 27-2-2010 which is pari materia to the Notification No. 45/2010-S.T., dated 20-7-2010. In view of the discussion above, we do not find any merit in the appeal of the Department which is accordingly dismissed. The appeals as well as stay applications filed by the assessee are allowed and the demand confirmed by the impugned order is set aside
.
Decision:- Assessee’s appeal allowed/Department’s appeal dismissed.

Comment:-The analogy drawn from this case is that the anciliary services to the main services are also exempted as in the present case, installation of electric meters was incidental service to the main service of transmission and distribution of electricity that was exempted vide notification no. 45/2010-ST. Accordingly, the service of installation of electric meters was also held to be exempt.

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PJ-Case law-2012/13-1558

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