Case Law Details
Tamil Nadu Generation And Distribution Corporation Limited Vs Commissioner Of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that all taxable services provided for the transmission and distribution of electrical energy are exempt from the liability to service tax during the impugned period. Accordingly, demand of service tax, interest and penalty set aside.
Facts- Based on intelligence, it revealed that the appellant TANGEDCO had been collecting fees/charges from the developers of windmills for processing their registration/application /name transfer from their Wind Energy Generators for the services provided which it appeared is classifiable under the category of ‘Business Auxiliary Service’; Consultancy charges for preparation of field feasibility report etc. to establish wind farms at notified sites in the State which services are classifiable under the category of ‘Consultant Engineer Service’; fee from non-employees towards participation in the training/workshop conducted by them at their training institute, which are classifiable under ‘Commercial Coaching and Training’ and the appellant had also let out their vacant land on rental lease to M/s. GMR Vasavi Power Corporation for setting up their diesel engine-based power plant at Basin Bridge, Chennai and the lease rental income received from M/s. GMR Power Corporation appeared to be taxable under the taxable category of ‘Renting of Immovable Property Service’.
The appellant had not registered themselves with the department nor had they paid service tax even after qualification of accounts by statutory auditors on non-payment of service tax liability. It therefore appeared that they had suppressed relevant facts from the knowledge of the department and contravened the aforesaid provisions of law with an intention to evade payment of service tax. Hence periodic Show Cause Notices were issued to the appellant demanding service tax. After due process of law, the adjudicating authorities under the above Orders-in-Original confirmed the service tax demand along with interest and imposed penalties under various provisions of Finance Act, 1994.
Conclusion- Held that all taxable services provided for the transmission and distribution of electrical energy are exempt from the liability to service tax during the impugned period. The sole purpose of the impugned activities as described above are ‘for’ ensuring the transmission and distribution of electricity. These services are not provided independently and are part of the appellant’s statutory functions and are hence done ‘for’ transmission and distribution of electric power to various consumers located within the state of Tamil Nadu in terms of the provisions of the Electricity Act, 2003. Without the said services being rendered transmission and distribution of electricity would be impaired. This being so the activities though being taxable services are covered by the exemption notifications stated above prior to 1.7.2012, and from the said date they figure in the negative list as per Section 66D(k) of the Finance Act 1994. Hence the appeal succeeds.
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