2026-VIL-63-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Transmission of electricity, Exemption to various charges - Appellant had collected various charges such as estimated cost of materials, erection charges, contingency charges, supervision charges, development charges, pro-rata charges, revenue loss charges and other charges, on which they were not paying service tax - Whether the various charges collected by the appellant are exempt from service tax – HELD - The material cost, which is the reimbursement of actual cost of materials, is not liable to service tax. Regarding contingency charges, these charges are collected from consumers considering future variations in the cost of labour and material, and if there is no fluctuation, the charges are paid back to the consumers. Therefore, the Adjudicating Authority is directed to re-compute the service tax liability after getting the requisite details/data from the appellant on material cost and contingency charges - The pro-rata charges and development charges are collected by the appellant for the development of an efficient, coordinated, and economical system of intra-state transmission lines, which is its responsibility as a transmission utility. Considering the exemptions and Circulars issued by the CBIC, these charges are not liable to service tax - Regarding the erection charges, these are recovered from the consumers for shifting of overhead cables/wires, which is exempt from service tax as per the CBIC Circular No.123/5/2010-TRU dated 24.05.2010 - The pro-rata charges, development charges, and erection charges are not liable to service tax, and the demand, if any, shall be limited to the normal period of limitation - The appeal is allowed by way of remand - Whether the demand of service tax is barred by limitation – HELD - The entire facts were in the knowledge of the department, as it had issued similar show cause notices to other units of the appellant. Therefore, invoking the extended period of limitation is not justified, and the demand, if any, arising out of re-computation, shall be limited to the normal period.
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