Custom, Excise & Service Tax Tribunal
Tamil Nadu Generation And Distribution ... vs Service Tax - Chennai on 24 April, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 41977 of 2013
(Arising out of Order-in-Original No. 12/2013 (RST) dated 21.06.2013 passed by the
Commissioner of Central Excise, Chennai-III Commissionerate, No. 26/1, Mahatma
Gandhi Road, Nungambakkam, Chennai - 600 034)
M/s. Tamil Nadu Generation and Distribution : Appellant
Corporation Limited
(Formerly known as 'Tamil Nadu Electricity Board')
Ennore Thermal Power Station, Ennore, Chennai - 600 057
VERSUS
The Commissioner of Service Tax : Respondent
Newry Towers, Plot No. 2054, I Block, II Avenue, 12th Main Road, Anna Nagar, Chennai - 600 040 AND Service Tax Appeal No. 41979 of 2013 (Arising out of Order-in-Original No. 13/2013 (RST) dated 05.07.2013 passed by the Commissioner of Central Excise, Chennai-III Commissionerate, No. 26/1, Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034) M/s. Tamil Nadu Generation and Distribution : Appellant Corporation Limited (Formerly known as 'Tamil Nadu Electricity Board') Ennore Thermal Power Station, Ennore, Chennai - 600 057 VERSUS The Commissioner of Service Tax : Respondent Newry Towers, Plot No. 2054, I Block, II Avenue, 12th Main Road, Anna Nagar, Chennai - 600 040 APPEARANCE:
Shri R. Alwan, Advocate for the Appellant Shri R. Rajaraman, Assistant Commissioner for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER NOs. 40297-40298 / 2023 DATE OF HEARING: 24.03.2023 DATE OF DECISION: 24.04.2023 2 Appeal. No(s).: ST/41977 & 41979/2013-DB Order : [Per Hon'ble Mr. P. Dinesha] Brief facts, as could be gathered from the orders of the lower authorities, which are relevant for our consideration are that the appellant is a Government of Tamil Nadu undertaking engaged in the generation of electricity, during the course of which fly ash is generated as a by-product. Thus, the generated fly ash was supplied, as per Government policies, to cement manufacturers.
2. Entertaining a doubt, based on intelligence, it appears that the Revenue issued Show Cause Notices dated 04.04.2011 and 08.04.2011 inter alia proposing to treat the supply of fly ash to cement companies under the category of business support service under Section 65(104c) of the Finance Act, 1994 and thereby, proposing to demand Service Tax for the period from May 2006 to September 2010 apart from applicable interest/(s) and penalties.
3. It appears that the appellant filed very detailed replies denying any liability and further contending that it did not render any service, much less business support service, as alleged, but however, not satisfied with the explanation, the Adjudicating Authority proceeded to pass the Order-in-Original Nos. 12/2013 (RST) dated 21.06.2013 and 13/2013 (RST) dated 05.07.2013, thereby confirming the demands, as proposed.
4. Feeling aggrieved by the demands raised in the impugned Orders-in-Original, the appellant has filed the present appeals before this forum.
5. Heard Shri R. Alwan, Learned Advocate appearing for the appellant and Shri R. Rajaraman, Learned Assistant Commissioner appearing for the Revenue.
6. The Learned Advocate for the appellant would submit, at the outset, that the said issue of demand of tax for the service under business support service, as alleged 3 Appeal. No(s).: ST/41977 & 41979/2013-DB by the Revenue against the appellant, does not survive as the same has been laid to rest by this Chennai Bench of the CESTAT in the cases of the appellant's sister concern, namely: -
(i) M/s. Mettur Thermal Power Station v. Commissioner of Central Excise, Salem (Final Order No. 40527/2014 dated 26.06.2014 - CESTAT, Chennai) [2014 (12) TMI 954 -
CESTAT, Chennai]; and
(ii) M/s. Mettur Thermal Power Station v. Commissioner of C.Ex. (S.T.), Salem (Final Order No. 40456/2013 dated 07.10.2013 - CESTAT, Chennai) [2015 (38) S.T.R. 606 (Tri. - Chennai)].
7. Per contra, the Learned Assistant Commissioner supported the findings of the lower authority, but however, was unable to distinguish the cited judicial precedents.
8. We have heard the rival contentions and have gone through the orders of the lower authority; and we find that the only issue that crops-up for our decision is: whether the appellant is rendering business support service within the meaning of Section 65(104c) of the Finance Act, 1994, as alleged by the Revenue, to justify the demand?
9.1 We have gone through the orders of the Chennai Bench of the CESTAT (supra) relied upon and we find that a more or less identical issue has been considered in the Final Order No. 40527/2014 dated 26.06.2014 (supra) wherein this Bench has followed its earlier order in Final Order No. 40456/2013 dated 07.10.2013 (supra) and has reproduced the relevant portion, which is extracted hereinbelow for the sake of convenience: -
"4. The Ld AR on behalf of the Revenue submits that the appeal was mainly dismissed for non-compliance of the stay order. However, we find that the issue involved in this case has already been settled by the Tribunal in the appellant's own case in Final Order No. 40456/2013 dated 07.10.2013, for the earlier period. By the said 4 Appeal. No(s).: ST/41977 & 41979/2013-DB order, the Tribunal set aside the demand of tax and allowed the appeal filed by the appellant. The relevant portion of the said order is reproduced below:-
14. We have already discussed above that the Tamil Nadu Electricity Board issued order dated 11.12.2003 for collection of the rates as 'service charges' in view of the Notification issued by the Central Government directing not to receive any payment or any consideration for fly ash and the order issued by State of Tamil Nadu is to charge 'rates'. Subsequently, the appellant also issued orders and mentioned the rates as service charge.
After introduction of levy of service tax on 'Business Support Service' as on 1.5.2006, the Deputy Commissioner of Central Excise, by letter dated 29.3.2007 requested the appellant to furnish details of service charges collected for Fly ash removal for the last five years from 2002 - 03. So the submission of the learned Senior Advocate that the dispute was raised on the basis of letter dated 29.3.2007 of the Deputy Commissioner of Central Excise showing the activities as service charges, is factually incorrect. The appellant in the statement of Fly ash Generation/ Utilization and Disposal for the Period April 2005 to march 2006 mentioned the total amount as Revenue to Board. But, the Chief Engineer of Mettur Thermal Power Plant by his letter dated 10.5.2007 informed the Deputy Commissioner of Central Excise that the service charges is collected towards the disposal of fly ash for the infrastructure, water, lighting and road maintenance. The adjudicating authority on the basis of the said letter dated 10.5.2007 observed that the appellants are rendering certain facilities to their customers for lifting the fly ash from their premises, which is being charged as service charges. These facilities are indispensible for the customers to lift the fly ash from the premises of the appellant for further use as raw material in the production of their finished goods.
15. On perusal of the notifications issued by the Central Government, orders issued by the Government of Tamil Nadu directing the manner of collection and removal of Fly ash on a particular rate to the cement and asbestos sheet companies, we are unable to accept the finding of the adjudicating authority. The expression "any service provided or to be provided to any person, by any other person" in Section 65(105)(zzq) makes it clear that a person would provide a service to other persons. The Honble Bombay High Court in the case of Indian National Shipowners 5 Appeal. No(s).: ST/41977 & 41979/2013-DB Association Vs. Union of India & Others - 2009 (14) STR 289 (Bom.) observed as under:-
From the above judgments the inevitable conclusion that follows is that the services rendered by a person must have a direct or a proximate relation to the subject matter of the taxing entry and the context in which the words in relation to are used has to be borne in mind to judge the extent of the scope of an entry which may be of wide amplitude. In the circumstances of the case services having remote connections cannot be included in entry (zzzy) merely on the strength of the words "in relation to". In the present case, we have already stated above that the orders issued by the appellant to the cement and asbestos sheet companies do not disclose that the appellant provided any service to the companies. The appellants as per order of Government of Tamil Nadu removed the Fly ash from the site and collected rate as prescribed therein from the said companies. At the best, the amount collected by supply Fly ash utilized for water, lighting, road maintenance etc. in their site as referred in letter dated 10.5.2007 appears to be in conformity with the utilization of Fly ash as mentioned in Draft Notification dated 6.11.2008 issued by the Central Government, wherein the Thermal Power Stations are permitted to sell Fly ash. There is no mention in the contract between the appellant and cement and asbestos sheet companies that the appellant is providing any service to them.
16. In our considered view, the activity of collection and removal of Fly ash as per rate of the order of Government of Tamil Nadu would not constitute infrastructural support service under the definition of Support Service of Business or Commerce. We have noticed that Government of India, Ministry of Environment and Forests issued Notification dated 14.9.1999 to the effect that Fly ash should be supplied free of cost. Subsequently, by notification dated 6.11.2008, issued by Ministry of Environment and Forest, Thermal Power Stations are permitted to sell Fly ash to the user agencies. It makes it clear that the consideration received by the appellant from the cement and asbestos sheet companies for supply of Fly ash seems to be for sale of fly ash. In our opinion, it is not for any service provided to the persons taking delivery of Fly ash, notwithstanding the name under which, it is collected. Hence, the demand of service tax along with interest is not sustainable.
6Appeal. No(s).: ST/41977 & 41979/2013-DB
17. We also find force in the submission of the learned Senior Advocate on limitation insofar as the adjudicating authority had granted relief from penalty under Section 76 and 78 of Finance Act, 1994 by invoking Section 80 of the said Act, 1994. As the demand of service tax is not maintainable on merit, there is no need to discuss on limitation in detail.
5. We find that the Tribunal had already set aside the demand of tax in the applicant's own case for earlier period. Hence, there is no reason to remand this case to the Commissioner (Appeals). Accordingly, we set aside the impugned orders. The appeal filed by the appellant is allowed with consequential relief. The stay petition is disposed of. Miscellaneous application is filed by the appellant to link the present appeal with appeal No. ST/286/2009. It is seen that the said appeal has already been decided by Final Order dated 7.10.2013 as mentioned above. Hence, miscellaneous application is dismissed as infructuous."
9.2 We find that the issue on hand is no more res integra in view of the fact that the same has already been decided by this very Bench in the cases of M/s. Mettur Thermal Power Station (supra) and hence, following the ratio laid down therein, we are of the view that the disputed activities of the appellant cannot be treated as business support service and the consequent demand would not therefore survive.
10. In the result, the impugned orders are set aside and the appeals are allowed with consequential benefits, if any, as per law.
(Order pronounced in the open court on 24.04.2023) Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Sdd