Order Date – 10 April 2023

Parties: M/s Madhya Pradesh Power Transmission Company Ltd. Vs Commissioner CGST, Jabalpur

Facts – 

• The Appellant, M/s Madhya Pradesh Power Transmission Company, is a public sector undertaking established by the Government of Madhya Pradesh for transmission of electricity within the city of Jabalpur and is a successor company of the State Electricity Board.
• A show cause notice dated 10.08.2018 was issued to the appellant for the period 2013-2014 to 2016-2017 alleging that the appellant was required to pay service tax on consultancy services and damages/ penalties recovered. The appellant had short paid service tax on manpower recruitment services and on the legal services.

Issue – 

• Whether the demand of service tax on consultancy services and other services are in order? 

Order – 

• The Tribunal observed that in the present case the amount collected towards consultation services are in connection with services which are incidental to the transmission activities carried out by the appellant. The demand, therefore, cannot be sustained in the view of the decision of the Tribunal in the case of Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Ltd.
• The Tribunal relying on the decision of the Tribunal in Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Ltd. Which observed that no service tax can be levied on the amount collected towards liquidated damages or penalty for breach of any of the terms of the contract.
• As regards confirmation of demand on manpower recruitment services, the contention of the appellant that most of the service providers were public limited or private limited who discharge their own liabilities was not accepted as the appellant could not substantiate this contention with documents.
• In regard to confirmation of service tax proposed in the show cause notice towards legal services, the appellant has not also been able to substantiate that certain amount towards stamp duty was included. Such being the position the confirmation of demand under legal service is justified.
• Hence the appeal is allowed to the extent indicated above.

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