2026-VIL-343-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of power transmission and distribution activities and related services - Appellant is a DISCOM (electricity distribution company) engaged in the distribution of electricity - DGGI issued notice demanding service tax on the appellant's activities, alleging wilful fraud, wilful misstatement and suppression of facts to evade payment of tax - Whether the power transmission and distribution activities and related services provided by the appellant are exempt from service tax – HELD - The Gujarat High Court in Torrent Power Ltd. vs Union of India has held that the activities related and ancillary to transmission and distribution of electricity are exempt from service tax as they are naturally bundled with the main service of transmission and distribution of electricity, which is itself exempt. The meaning of "transmission and distribution of electricity" does not change for the negative list regime or the GST regime, and the services which were considered as part of the main service during the pre-negative list regime cannot be excluded now. The legislative intent behind the exemptions provided for power transmission and distribution activities, including the ancillary services, from 2010 onwards. Accordingly, the demand of service tax on the appellant's activities and related services is set aside and the appeal is allowed - Whether the extended period of limitation can be invoked in the present case - HELD - The Revenue could not establish conclusively that the appellant had suppressed material facts with an intention to evade payment of service tax. The extended period of limitation can be invoked only when the "suppression" is shown to be wilful and with an intent to evade payment of duty. In the present case, only a general statement was made by the Commissioner about the appellant's wilful misstatement, without any conclusive evidence. Therefore, it is not possible to sustain the demand made for the extended period of limitation - The demand for the extended period of limitation is also set aside.
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