The supply of electricity constitutes an absolute sale of goods and is therefore not subject to service tax under the category of 'Management, Maintenance or Repair Service' under the Finance Act, 1994.

Per Ashok Jindal :

The appellant is in appeal against the impugned order wherein demand of service tax of Rs.77,60,470/- has been confirmed along with interest and an equivalent amount of penalty has also been imposed on the appellant under Section 78 of the Finance Act, 1994 and a penalty of Rs.10,000/- has also been imposed under Section 77 of the Finance Act, 1994.

2. The brief facts of the case are that the appellant is a Private limited registered with the Service Tax Authorities vide registration no. AAACU3845QST001 for provision of “Management, maintenance or repair service” and “Renting of Immovable Property”.

2.1 Pursuant to an Indenture of Conveyance dated 24-12-2002 executed between the President of India and the Appellant, the Appellant acquired a commercial property at 21, Hemant Basu Sarani, Kolkata – 700001. The property comprised of multiple units, majority of which were sold and others rented out. The Appellant also undertook management and maintenance of the property, duly discharging service tax on such services and filing periodic returns.

2.2 In terms of an agreement dated 19-12-2008, the Appellant procured high-tension (6KV) electricity from CESC, converted the same into low tension (415 V) through a transformer, and supplied it to occupants (owners/tenants). The Appellant raised separate bills for the said electricity charges based on actual consumption and meter readings, in accordance with Clause 14 of the agreement. Further, during FY 2009-10, the Appellant installed a transformer for which expense of Rs.39,56,225/- was incurred and only Rs. 29,47,575/- wasrecovered from the occupants as one-time installation charges, on which no service tax was discharged.

2.3 A Show Cause Notice bearing C. No. V(15) 220/ST Adjn/Commr/12/24469-71 dated 16-10-2012, was issued, proposing a demand of service tax amounting to Rs.77,60,470/-on the allegation that electricity charges recovered from occupants and amounts collected towards transformer installation constitute consideration for “Management, Maintenance or Repair Service” and are includible in the taxable value as property maintenance charges.Pursuant to adjudication proceedings, the Order-in-Original No.32/Commr/ST/Kol/2013-14 dated 18-09-2013 confirmed the demand on the alleged ground that the Appellant did not had license for electricity transmission and distribution and the Appellant has not produced documentary evidence to claim benefit of Notification No.12/2003-Service tax dated 01-07-2003.

Being aggrieved with the said order, the appellant is before us.

3. The ld.Counsel appearing on behalf of the appellant submits that in respect of “Electricity charges” relating to Service tax Rs.74,56,869/, it is submitted that electricity constitutes “goods” and is specifically covered under Schedule A to the West Bengal Value Added Tax Act. Under the erstwhile positive list regime, Notification No.12/2003-ST provided for exclusion of the value of goods from the taxable value and, accordingly, no service tax is leviable thereon. In the present case, the Appellant has raised separate invoices for electricity charges, which has been expressly acknowledged in the impugned order. The issue at hand is squarely covered by the decision in Commr. vs M/s DLF Infocity Developers (Kolkata) Ltd. [2025 (8) TMI 1658 – CESTAT Kolkata], wherein, after considering various judgments of the Hon’ble Supreme Court, it was held that supply of electricity to tenants constitutes sale of goods and is not liable to service tax.

3.1 It is further submitted that even if the distribution of electricity by the Appellant is not treate