Works Contract Service Provided To CESC For Transmission Or Distribution Of Electricity Not Liable To Service Tax: CESTAT Kolkata

Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) examined whether the works contract service provided by the assessee to Calcutta Electricity Supply Corporation (CESC) for transmission or distribution of electricity is liable to service tax or not.

In the case at hand, the assessee/appellant was engaged in the business of laying and repairing electric cables along with or under the roadside for and on behalf of Calcutta Electricity Supply Corporation (CESC).

In executing the said work, the assessee was required to carry out various allied works, i.e. High-Tension Construction, laying of pipes and shifting of cables, drums and materials, cable joining works and posting of watchmen. These allied works and activities are incidental to the main activity of laying cables.

A show-cause notice was issued to the assessee seeking the demand of service tax on almost the entire income of the assessee, as well as on the amount received from CESE on account of PF reimbursement. The Adjudicating Authority confirmed the service tax demand made in the show cause notice.

The assessee submitted that the transmission or distribution of electricity by an electricity transmission or distribution utility, which falls under Clause (k) of Section 66D of the Finance Act, 1994 (Negative List of Services), is, therefore, not liable to pay service tax.

The Tribunal noted that the transmission or distribution of electricity is exempted by way of Notification No.45/2010-ST dated 20.07.2010 and Sl.No.29 (h) of Notification No.25/2012-ST dated 20.06.2012, wherein exemption for works contract service provided by the assessee by the sub-contractor, is allowed as the transmission or distribution of electricity by an electricity transmission or distribution utility falls under Clause (k) of Section 66D of the Finance Act, 1994.

The bench held that the whole of the activity undertaken by the assessee was not a taxable service. Accordingly, the service tax is not liable to be paid by the assessee.

The Tribunal stated that the assessee has collected service tax from the service recipient, but the same has been deposited with the department, and the same is not required to be refunded to the assessee. Further, the assessee has paid excess service tax to the Department. The same is required to be refunded to the assessee.

In view of the above, the Tribunal allowed the appeal.

Case Title: M/s S. Chatterjee & Sons (India) Pvt. Ltd. v. Commissioner of CGST & Central Excise, Kolkata

Case Number: Service Tax Appeal No.75962 of 2017

Counsel for Appellant/ Assessee: Arun Kumar Agarwal & Pinky Khemka, Chartered Accountants

Counsel for Respondent/ Department: D. Sue

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