Service tax on electricity distribution

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Pandharinath

Pandharinath (Querist)
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13 August 2015 kindly request to all please send me notification of electricity charges exempt from service tax

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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13 August 2015 SECTION 66 D of the Finance Act, 1994 contains the Negative list of services. As per Section 66 D(k), transmission or distribution of electricity by an electricity transmission or distribution utility is covered under negative list and hence no service tax is attracted.

Electricity transmission or distribution utility has been defined under Section 65B(23) as:

"electricity transmission or distribution utility" means the Central Electricity Authority; a State Electricity Board; the Central Transmission Utility or a State Transmission Utility notified under the Electricity Act, 2003; (36 of 2003.) or a distribution or transmission licensee under the said Act, or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government;

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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13 August 2015 The developer or the housing society would be covered under this entry only if it is entrusted with such function by the Central or a State government or if it is, for such distribution, a distribution licensee licensed under the Electricity Act, 2003.

The activity of distribution of electricity within a residential complex is thus a taxable service (Not being within the scope of negative entry), if it is not entrusted with such function by a Central or State government or if it has no distribution license under the Electricity Act, 2003.

Grant of License to transmit/distribute/trade in electricity is governed by Section 14 of the Electricity Act, 2003 and as per the 7 th proviso,

Provided also that in a case where a distribution licensee proposes to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned State Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply:

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