2026-VIL-931-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption of Services under Notification No. 45/2010-ST for Transmission and Distribution of Electricity - Revenue contention that the services provided for setting up of power generation and transmission equipment prior to actual generation of electricity cannot be considered as services in relation to transmission and distribution of electricity - Whether services rendered for supply, erection, installation and commissioning of power transmission and distribution infrastructure constitute services "in relation to transmission and distribution of electricity" eligible for exemption under Notification No. 45/2010-ST, even when such services are provided during the preparatory phase before commencement of actual electricity generation and distribution - HELD – The services rendered fall squarely within the ambit of Notification No. 45/2010-ST which exempts services provided "in relation to" transmission and distribution of electricity. The phrase "in relation to" has been consistently interpreted by courts to include preparatory, enabling and supportive activities integrally connected to transmission and distribution networks. The fact that electricity generation and distribution had not commenced at the time of providing the services does not exclude such services from the exemption as the contracts were with entities engaged in transmission and distribution of electricity and the services were directly linked to establishing the infrastructure necessary for such transmission and distribution - The findings recorded by the Commissioner are well-reasoned and fully supported by statutory provisions and binding judicial precedents - The order-in-original dropping the entire service tax demand is upheld and the Revenue appeal is dismissed - Taxability of Transportation and Freight Charges as GTA Service - Whether separately quantified freight and insurance charges recovered for transportation, handling and delivery of equipment as part of supply and erection contracts constitute taxable Goods Transport Agency Service or Transport of Goods by Road Service, or whether such charges form an incidental and ancillary part of the composite erection contract exempt from taxation – HELD - The service tax is required to be paid as per the amount mentioned in the consignment note and the applicable statutory rules. Absent consignment notes and evidence of who the actual transporter or carrier was and whether the consignor or consignee was liable under the consignment note, service tax cannot be appropriately levied on the freight and insurance collected from clients - The transportation undertaken was incidental to the execution of erection contracts and does not constitute a standalone taxable service. The service provider did not qualify as a GTA under the statutory definition and the manner in which service tax was demanded on freight and insurance is against the provisions of the Service Tax Rules - The order-in-original dropping the GTA service demand is upheld and the Revenue appeal is dismissed
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