Order date – 23 August 2022

Facts – 

• The appellant, M/s KEC International Ltd., engaged in the manufacture of power transmission towers and parts and accessories. The appellant is also engaged in the supply of such towers, parts and accessories and erection, commissioning and installation of such towers.
• They were allotted two separate contracts by various Electricity Distribution Authorities. The first one was for ex-works supply of parts of towers manufactured as per the designs provided by EDAs and the second was for setting up of transmission line which included erection and installation of towers, for which, goods such as conductors, insulators were provided by EDAs. 
• The appellant discharged excise duty and VAT on the sale price of the parts of towers sold to EDAs under the first contract. For the second contract, the appellant was using materials such as concrete, reinforcement steel, nuts, bolts etc. and was discharging its service tax liability under works contract services. 
• The department issued a SCN dated 03.05.2012 for the period 01.06.2007 to 31.03.2011 alleging that the value of towers/parts supplied by the appellant under the first contract should have been added to the value of the second contract for determining the Service tax liability and also alleged that the appellant had artificially split the two contracts to evade the payment of service tax therefore the demand along with penalty was confirmed.
• Aggrieved the appellant filed an appeal.

Issue – 

• Whether the demand of Service tax along with penalty is justifiable? 

Order – 

• The Tribunal observed that by virtue of Notification No. 45/2010-ST dated 20.07.2010 and Notification No. 11/2010-S.T. dated 27.02.2010, service for transmission of electricity was exempted for the entire relevant period by virtue of the notification dated 20.07.2010 (till the period of 26.02.2010) and the notification dated 27.02.2010 (w.e.f. 27.02.2010) and, therefore, so far as the activities undertaken by the appellant are concerned, no service tax is payable as these activities are towards the erection of transmission lines and hence, are exempted.
• The Tribunal relied on the decision of the Kedar Construction – Cestat in which they also considered the notification dated 27.02.2010 and held that since the exemption is available if the taxable services are rendered for transmission of electricity, the expression “for‟ would cover a very wide gamut of activities and, therefore, the activities undertaken by the appellant would be eligible to the benefit of a notification, as was also held by the Tribunal in Noida Power Company Limited.
• Appeal allowed and order was set aside.