TaxTMI 
TaxTMI 
2025 (10) TMI 457
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....i West). 3. The Petitioner vide the present petition further seeks a direction that the collection of service tax on the supply of electricity by the Petitioner is not liable to be taxed under the Act as the same is under the purview of the State List as per the VII Schedule of the Constitution of India. Facts 4. The Petitioner owns a shopping mall by the name 'MOMENTS' at Kirti Nagar, New Delhi. The said mall was developed during the years 2008-2011 on approximately 6.18 acres of land having approximately 5,00,000 sq. ft. of leasable area. Various commercial spaces in the said mall are given on lease to tenants for running their showrooms/outlets. 5. According to the Petitioner, it is registered with the Service Tax Department (hereinafter, 'Department') and is providing services of renting of immovable properties. It is stated that the Petitioner has duly paid the applicable service tax and files returns regularly. Apart from the rental amount that it collects, the Petitioner also provides certain maintenance services as also common-area facilities to its tenants. In respect of these facilities, service tax is also paid by the Petitioner on monthly billing basis. 6....
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....icensee undertakes to reimburse for the use of such electricity and power backup in the Licensed Space, against monthly bills/invoices submitted to it by the Licensor, by the due date specified in such bills, without any delay. The reimbursements/ costs for electricity consumed in Food Court shall be based upon the costs of: procurement/ generation, distribution, loss factors, related manpower costs, the maintenance & management of all related equipments, service charges and applicable taxes, as certified by the Licensor/ MMA." 7. Audits were conducted by the Department in the year 2015 and various documents were sought from the Petitioner. One of the issues over which queries were raised during the audits were related to electricity bills. After the audits, the Department issued a Show Cause Notice (hereinafter, 'SCN') dated 18th October 2016 to the Petitioner. One of the grounds taken in the SCN was that the Petitioner had not paid service tax on the electricity charges recovered towards supply of electricity to various shops in the mall through sub-meters installed in the said shops. 8. The case of the Department was that the Petitioner is supplying electricity as a part o....
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...."3.14 In view of above I find that the party is liable to pay service tax on such Electricity Charges Income under Management, Maintenance & Repair Services in terms of erstwhile Section66 of the Act read with Section 65(64) of the Finance Act, 1994 upto 30.06.2012 and under Section 66B of the Act ibid w.e.f. 01.07.2012. Accordingly I hold that the service tax amounting to Rs. 1,24,40,055/- and Rs. 50,81,940/- including Education Cess and Secondary & Higher Education Cess is recoverable under the provisions of Section 73(1) of Finance Act, 1994,read with Section 66, 66B and 68 of the Act ibid and read with Rule 6 of Service Tax Rules, 1994read with Section 91 and 95 of the Finance (No.2) Act, 2004 for Education Cess, Section 136 and 140 of the Finance Act, 2007 for Secondary & Higher Education Cess along with interest under the provisions of Section 75 of Finance Act, 1994." Thus, the service tax towards electricity charges collected by the Petitioner from its tenants as contemplated under both the SCNs was confirmed by the Adjudicating Authority. 13. The relief sought by the Petitioner in the present writ petition is as under: "A) issue a Writ of certiorari/ mandamu....
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....by the distribution companies directly on the consumers. To support this position, various bills have been placed on record by the Petitioner to show that the unit rate that was being charged by the Petitioner from its tenants was same to that of the distribution company. 15. Ld. Counsel for the Petitioner further submits that though the impugned order has been passed in respect of various issues, the only issue which is being agitated and pressed in this writ petition is qua electricity charges. It is submitted on behalf of the Petitioner that the legal position stands settled that electricity constitutes goods and hence, no service tax would be payable on the same. 16. Ld. Counsel for the Petitioner also submits that to include electricity charges into maintenance charges would be incorrect as the electricity which is being received from the distribution company i.e., NDPL is being directly permitted to be used by the tenants and the bills as raised on the basis of units consumed as per the electricity sub-meters installed in respect of the tenants. No amount is added over and above what is charged by the distribution companies. Thus, in his submission, there is no providin....
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.... transferred, delivered, stored, possessed etc. in the same way as any other movable property". In this observation we agree with Grover, J. on all other characteristics of electric energy except that it can be "stored" and to the extent that electric energy can be "stored", the observation must be held to be erroneous or by oversight. Science and technology till this day have not been able to evolve any methodology by which electric energy can be preserved or stored. [Ed. : This is largely true for the scale of operation under discussion in this case. A very small amount of electrical energy, however, can be stored in accumulators which can be retrieved and used by inverters, as commonly called.] 21. Another significant characteristic of electric energy is that its generation or production coincides almost instantaneously with its consumption. To quote from Aiyar's Law Lexicon (2nd Edn., 2000)- "Electricity in physics is 'the name given to the cause of a series of phenomena exhibited by various substances, and also to the phenomena themselves'. Its true nature is not understood. Imperial Dictionary (quoted in Spensley v. Lancashire Ins. Co. [54 Wis 433, 442, ....
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....as interpreted by a Co-ordinate Bench of this Court in the aforesaid decision, there are four essential elements of a 'service' under Section 65B (44) of the Act, and hence, the services provided by the Petitioner to its tenants do not satisfy the requirements of the said four elements. The said four elements are as under: a) There must be a person providing the service; b) There must be a recipient of the service; c) There must be an actual rendering of the service; and d) There must be consideration for the service. The relevant portion of the decision in Delhi Chit Fund Association (Supra) reads as under: "9. We shall first address the argument that what is excluded is only a service in relation to an activity which constitutes merely a transaction in money or actionable claim. The basis of this argument is the principle that a provision cannot exclude something from the definition, unless it is included in the definition. Section 65B(44) defines "service" as any activity carried out by a person for another for consideration. This implies, as pointed out on behalf of the petitioner, that there are four elements therein: the person who pr....
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....of Notification No. 32/2010-Service Tax dated 22nd June, 2010 and Clause (k) of Section 66D of the Finance Act, 1994." 25. Thereafter, vide order dated 16th January 2023, this Court has already observed as under: ""CM APPL. 4008/2018 (for exemption from filing certified copies of annexures) 1. Exemptions allowed, subject to all just exceptions. 2. The application stands disposed of. W.P.(C) 948/2018 3. The petitioner has filed the present petition inter-alia praying as under: "A) issue a Writ of certiorari/ mandamus or any other appropriate Writ/ order/ direction against the Respondents by quashing impugned provisions of section 66D(k) of the Finance Act, 1994 (reproduced in para 7 of writ petition) and the impugned Notification No. 32/201 0-Service Tax, dated 22-6-2010 (reproduced in para 6 of writ petition) by declaring that same lack legislative competency, ultra vires to the Finance Act, 1994 and transgress the provisions and the power granted under the Constitution of India, hence unconstitutional; B) issue a Writ of certiorari/ mandamus or any other appropriate Writ/ order/ direction declaring that sale/ supply....
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....ge to Section 66Dk of the Act is premised on the basis that placing the service relating to transmission or distribution of electricity by electricity transmission or distribution utility would mean that consumption of electricity is chargeable to service tax. Clearly, the provisions of Section 66Dk cannot be read to mean the aforesaid. 8. Insofar as the petitioner's challenge to the notification dated 22.06.2010 is concerned, it is relevant to note that by virtue of the said notification, the Government of India has "exempted taxable services provided to any person by a distribution licensee, a distribution franchisee or any other person by whatever mean called as authorized to distribute the power under the Electricity Act, 2003, from the scope of Section 66 of the Act". This notification also cannot be construed to mean that consumption of electricity as otherwise is chargeable to tax but for the said notification. 9. According to the petitioner, electricity is goods and, therefore, sale of the said goods is not chargeable to service tax. The impugned notification has no bearing on this contention. In view of the above, the prayer (A) made as above does not ari....
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....hat by virtue of the impugned Show Cause Notice, the petitioner has been called upon to show cause as to why it has not paid service tax on electricity charges received from his customers. 7. Mr. Harpreet Singh submits that the question whether in terms of the agreements between the petitioners and various persons who have taken space in the mall on the licensed basis from the petitioner, the consideration received can be split into consideration for electricity charges and charges for other services. 8. He submits that it is required to be examined whether the amount recovered by the petitioner from various licensees are consolidated charges for providing electricity and maintaining the backup and other services or whether the same can be split between electricity charges and charges for other attendant services. He states that if the electricity charges have been collected as reimbursement of the charges paid by the petitioner, the same may not be exigible to service tax; however, if the petitioner has recovered a composite amount for supply of electricity and other services, the question regarding the taxability of a composite charge requires examination. ....
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....at is being billed by the Petitioner to its tenants. 32. Accordingly, the short question is as to whether the Order-in-Original is liable to be quashed or not. 33. In the counter affidavit, the stand of the Department is that an appeal has been filed by the Petitioner in which vide Order-in-Appeal bearing no. 202/Central Tax/Appl-II/Delhi/2018 dated 23rd April 2018 (hereinafter, 'appellate order'), the case has been remanded back to the Adjudicating Authority for adjudication. The relevant portion of the appellate order is set out below: "The present appeal has been filed by M/s Anant Raj Projects Limited, Plot No. 67, Moments Mall, Najafgarh Road, DLF-Industrial Area, New Delhi-110015 (here-in-after referred to as "appellant") against the Order-in-Original No, 03/GST/DL-West/RR/2017-18 dated 30.11.2017 passed by the Additional Commissioner. CGST, Delhi West Commissionerate (here-in-after referred to as "Adjudicating Authority") wherein the Adjudicating Authority has confirmed the demand of Service Tax of Rs. 1,78,60,449/- (Rs. 1,24,40,055/- + Rs. 2,21,434/- + Rs 1,17,020/- + Rs. 50,81,940/-) along with interest as applicable against the appellant and also imposed pe....
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....m payment of service tax on electricity. It is only a distribution utility as under the Electricity Act, 2003 which is exempted from levy of service tax as it would fall under the 'Negative List'. 35. The appellate order dated 23rd April 2018 passed by the Commissioner of Central Tax, Appeals-II Delhi, had remanded the matter qua the issue of electricity charges to the Adjudicating Authority. However, the present writ petition has remained pending before this Court prior to the passing of the order by the Appellate Authority and this Appellate Authority's order is not specifically challenged. 36. The bills raised by the distribution company i.e., NDPL upon the Petitioner and the charges collected by the Petitioner from its tenants would show prima facie that there is no addition to the charges being collected by the distribution company in comparison to what is being collected by the Petitioner. However, this issue would have to be factually established by the Petitioner before the concerned Adjudicating Authority which would have to examine the same. 37. In the present writ petition, the initial issue that was for consideration is the Constitutional vires of Section 66D(k....
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.... be based or to correct errors of fact or even of law and to substitute its own decision for that of the inferior court or tribunal. The powers are required to be exercised most sparingly and only in appropriate cases in order to keep the subordinate courts and inferior tribunals within the limits of law. 39. In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram [(1986) 4 SCC 447] this Court stated : (SCC p. 458, para 16) "16. ... unless there was any grave miscarriage of justice or flagrant violation of law calling for intervention it was not for the High Court under Articles 226 and 227 of the Constitution to interfere. If there is evidence on record on which a finding can be arrived at and if the court has not misdirected itself either on law or on fact, then in exercise of the power under Article 226 or Article 227 of the Constitution, the High Court should refrain from interfering with such findings made by the appropriate authorities." 41. The Supreme Court in the decision in Civil Appeal No. 5121/2021 dated 3rd September, 2021 titled 'The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited', held as under: "11. The responden....