2026-VIL-1263-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Supply of Services in relation to Electricity Generation - Appellant undertaken fabrication and erection activities in Bhutan as approved sub-contractor for Punatsangchu Hydro Electric Project and Dagachu Hydro Power Project comprising fabrication of pressure shaft steel liners with accessories, testing, painting, transportation, erection, alignment and commissioning, and fabrication and supply of tunnelling formwork for hydroelectric power projects - Whether services are exempt from service tax under Notification No. 11/2010-ST dated 27.02.2010 and Notification No. 45/2010-ST dated 20.07.2010 - HELD - Services rendered by appellant were intrinsically connected with and meant for generation and supply of electricity through hydroelectric power projects in Bhutan. Notification No. 11/2010-ST granted exemption from service tax for taxable services provided for transmission of electricity and Notification No. 45/2010-ST granted exemption for services relating to transmission and distribution of electricity - The legislative intent was to exempt taxable services rendered in relation to generation, transmission or distribution of electricity. Activities undertaken by appellant being intrinsically and inextricably connected with hydroelectric power generation projects are unmistakably covered by exemption notifications – Further, the installation of electricity meters has been held to be in relation to transmission of electricity. Any activity or service like erection, commissioning and installation as also technical testing and analysis can easily be termed as services relating to transmission and distribution of electricity following decision in Tamil Nadu Electricity Board case wherein the scope and applicability of the aforesaid exemption notifications in relation to services connected with generation and transmission of electricity came to be considered - The impugned demand of service tax together with interest and penalties cannot be sustained and set aside – The appeal is allowed
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