Escolar Documentos
Profissional Documentos
Cultura Documentos
▪ Calcutta High Court in the case of Srijan Realty (P) Ltd vs Commissioner of Service Tax (2019-
VIL-112-CAL-ST) held that activity of supply of electricity by owner to the occupiers of
commercial complex is a service which the owner renders and such activity will be exigible
to service tax under the Finance Act, 1994
Arguments by department:
▪ Petitioner is providing service since it is converting high tension electricity supply received
from licensee to low tension and is supplying the low tension electricity to the various
occupiers.
▪ Trading or sale of electricity can de done by a person only who is legally permitted to do so.
▪ The petitioner is not permitted to sell electricity. The petitioner is legally authorised to
redistribute electricity.
▪ The Court therefore should not allow an interpretation which permits an illegality to be
perpetrated.
▪ As per MOU entered between the petitioner and licensee, petitioner is a consumer. The
bills raised by the petitioner are as a consumer. The licensee has raised bills on the
petitioner treating the petitioner as a consumer.
▪ The transaction in question, does not fall within the negative list and therefore, the 4
transaction is exigible to Service Tax.
Decision by Court:
▪ The petitioner cannot be said to be a generating company as per Electricity Act, 2003. The
petitioner is not an electricity trader as defined in Section 2(26) of the Electricity Act, 2003.
The petitioner does not have a licence to undertake trading in electricity under Section 12
of the Electricity Act, 2003. The petitioner also cannot be said to be engaged in the business
of transmission as, it does not have such a licence.
▪ The petitioner is not a person authorised and cannot be said to be distributing or selling or
trading in electricity when, it is receiving high-tension supply from Indian Power
Corporation Ltd. and providing low-tension electricity to the occupants of the commercial
complex.
▪ Sale, trading and distribution being taken out of the contention, the only other thing that
remains to describe the activity undertaken by the petitioner, is service. Any other
interpretation will render the steps taken by the petitioner in receiving high-tension
electric supply and making over low-tension electric supply to the occupants, violative of
the provisions of the Electricity Act, 2003. Such an interpretation should be avoided. 5
▪ The dominant purpose test as laid down in Bharat Sanchar Nigam Ltd. (supra) if at all
applied would be against the petitioner, in the facts of the present case. The activity of the
petitioner cannot be said to be a sale or a trade.
Conclusion:
▪ The transaction of the petitioner of obtaining high-tension
electric supply and converting it to low-tension supply and
supplying it to the occupants in lieu of electricity consumption
charges from such occupants is a service and such an activity is
exigible to Service Tax under the Finance Act, 1994.
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