2026-VIL-1186-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax on Supply of Electricity as Goods – Appellant entered into an agreement with CESC Limited to transform high-tension electricity into low-tension electricity and distribute it to occupiers, recovering charges from them for such redistribution and sale of electricity - Whether the amount recovered by Appellant from occupiers towards redistribution and sale of electricity is exigible to service tax under the category of "Management, Maintenance or Repair Service"- HELD - The supply of electricity constitutes a transaction of sale of goods and does not attract service tax liability. The Tribunal relies on its precedent decision in the appellant's own case which conclusively established that electricity, despite being intangible, falls squarely within the definition of "goods". Once electricity is held to be goods, charging service tax on the same treating it as provision of service is incorrect and unwarranted - The demand for service tax on electricity charges is set aside and the appellant is not liable to pay service tax. Consequently, no penalty is imposable on the appellant – The appeal is allowed - Service Tax on Refundable Security Deposits - Appellant collected refundable maintenance deposits from occupiers on super built-up area as a financial safeguard, adjustable only in the event of a default by the occupier in clearing monthly maintenance, electricity or common expenses -Whether maintenance deposits collected by Appellant from tenant/unit holders, which were adjustable only in the event of a default and were not adjusted during the relevant period, could be construed as an advance payment towards provision of a taxable service – HELD – The refundable security deposits cannot be considered as taxable consideration towards the provision of any service. When maintenance deposits are collected solely as a financial safeguard and are strictly refundable without being utilized by the appellant for maintenance purposes, no consideration is received for any taxable service. The principle that deposits merely held in custody for subsequent transfer or adjustment cannot constitute taxable consideration applies where no amount was charged for maintenance from such deposits nor was any amount thereof spent by the appellant. The fact that no default occurred during the relevant period and deposits remained unadjusted, untouched, and fully returnable demonstrates the absence of taxable consideration - The demand for service tax on maintenance deposits is set aside, consequently, no penalty is imposable on the appellant – The appeal is allowed
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