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Issues: Whether the activity of receiving high-tension electricity, converting it into low-tension supply and redistributing it to occupiers of a commercial complex amounts to a service exigible to service tax under the Finance Act, 1994, or is excluded as trading or sale of electricity.
Analysis: The petitioner was not authorised under the Electricity Act, 2003 to transmit, distribute or trade in electricity. On the statutory definitions, the petitioner could not be treated as an electricity trader, nor could the activity be characterised as lawful trading or sale of electricity. The Court held that the activity of procuring bulk supply, stepping it down, supplying it to occupiers on sub-meter readings, raising bills and collecting charges was not excluded by the negative list, because it did not amount to trading of goods or transmission or distribution of electricity by an electricity transmission or distribution utility. In the absence of a lawful sale or trade character, the activity fell within the definition of service under section 65B(44) and was chargeable under section 66B.
Conclusion: The transaction was held to be a service and was exigible to service tax. The writ petition was dismissed.
Ratio Decidendi: An unauthorised activity of supplying electricity to occupiers by a person without a licence under the Electricity Act, 2003 cannot be treated as lawful trading or sale of electricity and, if it otherwise answers the statutory definition, is taxable as a service under the Finance Act, 1994.
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