The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax payable on laying electrical cables upto distribution point of residential/commercial localities.
The bench of Somesh Arora (Judicial Member) and C.L. Mahar (Technical Member) has observed that activities such as laying of electrical cables upto distribution point of residential or commercial localities/ complexes and therefore, same is not taxable as per clarification issued by CBEC Circular No. 123/5/2010-TRU dated 24.05.2010. The appellant need to approach the original adjudicating authority with all the relevant documents to prove the fact that the activity undertaken by them is covered by Circular dated 24.05.2010.
The appellant/assessee is in the business of providing various kinds of services such as Business Auxiliary Service, Erection Commissioning and Installation Service, Maintenance and Repair services and Supply of Tangible Goods service etc.
Working on an intelligence the department had searched the premises of the appellant in which it was revealed that the appellant has not obtained any service tax registration as required under Finance Act, 1994 and they have not been paying service tax on the taxable service provided by them to various clients.
The appellant has deposited the amount towards their service tax liability along with interest. The appellant has also deposited a penalty being 25% of the service tax liability as per provisions of Section 78 of the Finance Act, 1994. A show cause notice dated 05.07.2011 was issued which was adjudicated. All the charges levelled in the show cause notice have been confirmed by the Adjudicating Authority. The appellant approached the Commissioner (Appeals) against the order however, they did not succeed.
The assessee contended that demand of service tax is not sustainable as it pertains to the activity of laying electrical cables upto distribution point of residential or commercial localities/ complexes and therefore Adjudicating Authority should have been extended the benefit of CBEC Circular No. 123/5/2010-TRU dated 24.05.2010 to them, when it is clarified that laying of electrical cables upto distribution point of residential or commercial localities/ complexes does not fall under the category of taxable service.
The assessee contended that the Commissioner (Appeals) has not considered their contention properly as to whether it was correct and legal on the part of the lower authorities to invoke the extended period of demand under Section 73(1) of Finance Act, 1994. When there were certain doubts regarding taxability of services of shifting of overhead cables, laying of cables alongside roads, laying of electric cables between grids/sub-stations/transformer stations en-route, laying of electrical cables upto distribution point of residential or commercial localities/complexes.
The tribunal noted that the entire activity undertaken by them for the demand period 2006-07 to 2010-11 was only detected by the department during the course of search at the premises of the appellant. Even if they were ignorant of the provisions of service tax, that does not exonerate them from demand of service tax under the extended time proviso under Finance Act, 1994.
The CESTAT remand back the matter to the Adjudicating Authority only for a limited purpose of determining as to how much taxable value is covered by the Circular No. 123/5/2010-TRU dated 24.05.2010.
Case Title: Subhlaxmi Electricals Versus Commissioner of Central Excise & ST, Daman
Case No.: Service Tax Appeal No. 00446 of 2012-DB
Date: 10.09.2024
Counsel For Appellant: PD Rachchh
Counsel For Respondent: Anand Kumar
