2025-VIL-1970-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 66 and 73 of Finance Act, 1994 – Distribution of electricity – Demand of tax – Sustainability – Appellant is engaged in distribution of electricity in licensed area of State – Revenue issued show cause notice to Appellant by invoking extended period of limitation as provided under Section 73 of the Act on ground of fraud, willful mis-statement and suppression of facts to escape payment of tax – Adjudicating Authority confirmed demand as proposed in show cause notice along with interest and penalty – Whether demand confirmed in impugned order against Appellant is sustainable – HELD – While issuing show cause notice, Revenue had simply gone by income shown in Profit & Loss accounts and Balance Sheet of Appellant and had treated entire income during financial years as income of Appellant. Very fact that transmission and distribution of electricity had been enjoying full exemption right from 2010 had not been considered at all by Revenue while framing allegation and quantifying the demand. Amended Section 66 of the Act clearly point out the legislative intent to grant full waiver of tax for providers of service towards transmission and distribution of electricity. Appellant have taken up the work of bifurcation of demand under 18 different heads, which had been properly certified by Chartered Accountant. Some of incomes like insurance claim received, interest from bank and interest on refund of income tax are outright not liable for any Service Tax payment. Other likely taxable income, but exempted, had been listed by Appellant within 18 categories, which tallies with certificate issued by Chartered Accountant. Revenue had failed to quantify demand properly, which had been done on a lumpsum basis, wherein several non-taxable incomes were also included. Demand confirmed against Appellant is set aside – Appeals allowed
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