Services provided for the supply and erection of infrastructure projects like power sub-stations and transmission towers are integrally connected to transmission and distribution of electricity and thus qualify for service tax exemption under Notification No. 45/2010-ST.

S. S. GARG :

The present appeal filed by the Revenue is directed against the impugned Order-in-Original dated 07.10.2013 passed by the Commissioner of Service Tax, New Delhi, vide which the learned Commissioner has adjudicated the Show Cause Notice dated 24.10.2011 and dropped the proceedings initiated vide the said Show Cause Notice against the Respondent.

Briefly stated facts of the present case are that the Respondent M/s Shyama Power India Ltd (‘SPIL’) were engaged in providing Engineering, Procurement and Construction (EPC) solutions on turnkey basis to Power Utilities which include Survey, Design, Supply and Construction of Power Transmission and Distribution Lines/Towers, Power Sub-Stations and Rural Electrification Projects and provision of services of Erection, Installation and Commissioning of such Power Transmission and Distribution Lines/Towers and Power Sub-Stations to its clients. The Respondent were discharging their service tax liability on the abovementioned services under the category of "Erection, Commissioning or Installation Services".

During the investigations conducted by the Directorate General of Central Excise Intelligence, Hqrs. New Delhi (‘DGCEI’), it was observed that the Respondent were indulging in evasion of service tax by wrongly availing abatement @67% from the gross value of the taxable services provided by them to their clients, and paying service tax on only 33% of such gross value, by incorrectly availing the benefit of service tax exemption in terms of Notification No. 1/2006-ST dated 01.03.2006, while providing "Erection, Commissioning or Installation Service/Works Contract Service". It was revealed that the Respondent were availing CENVAT Credit of Central Excise duty paid on inputs and service tax paid on input services and utilizing such CENVAT Credit for discharge of their service tax liability.

Further, scrutiny of service tax returns filed by the Respondent with the Department revealed that while availing the benefit of abatement @67% from the gross amount charged for providing taxable services, the Respondent failed to fulfill any of the conditions of the abovementioned exemption notification in so far as -

(a) They had not included the value of plant, machinery, equipment, structures, parts and other materials sold by them to their client, during the course of providing erection, commissioning or installation service.

(b) They had availed CENVAT Credit and utilized the same towards discharge of their service tax liability.

(c) They had not included the value of goods, sold during the course of providing taxable services, in the gross amount charged for the purpose of arriving at the taxable value of services rendered by them, which amounted to availing the benefit under Notification No. 12/2003-ST dated 20.06.2003.

It, thus, appeared that the Respondent had wrongly availed the benefit of abatement @67% from the gross amount charged for providing erection, commissioning or installation services in contravention of the conditions of exemption Notification No. 1/2006-ST dated 01.03.2006.

During the investigation, it was further revealed that the Respondent were evading service tax while providing the taxable service under the category of "Transport of Goods by Road", as they had neither obtained service tax registration under the said category nor had they paid any service tax, even when the service charges for transport of goods by road service were realized by them from their clients.

On the above allegations, a Show Cause Notice dated 24.10.2011 was issued to the Respondent demanding service tax to the tune of Rs.4,95,781/- under the category of "Erection, Commissioning or Installation Service", Rs.3,86,87,552/- under the category of “Works Contract Service" and Rs.57,90,235/- under the category of "Transport of Goods by Road Service" for the period 01.04.2006 to 31.03.2011. It also appeared that the Respondent had intentionally and willfully suppressed the facts from the Departm