CESTAT Kolkata Bench rules in favor of M/s S. Chatterjee & Sons, confirming that service tax on electricity transmission works is exempt, mandates refund of excess tax paid.
Kolkata, December 16, 2025 - In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata Regional Bench has adjudicated in favor of M/s S. Chatterjee & Sons (India) Pvt. Ltd. in a dispute over service tax liabilities related to electricity transmission works. The tribunal, comprising Judicial Member Mr. Ashok Jindal and Technical Member Mr. K. Anpazhakan, ruled that the works contract services provided by the appellant for the transmission and distribution of electricity are exempt from service tax under the Finance Act, 1994.
The appeal was filed against the order demanding service tax from the appellant, who is engaged in laying and repairing electric cables on behalf of the Calcutta Electricity Supply Corporation (CESE). The tribunal noted that such activities fall under the negative list of services outlined in Clause (k) of Section 66D of the Finance Act, 1994, which exempts them from service tax. This exemption is further supported by Notification No. 45/2010-ST dated July 20, 2010, and Notification No. 25/2012-ST dated June 20, 2012.
The tribunal highlighted that the appellant had collected service tax from the service recipient and paid it to the department. However, the excess service tax paid by the appellant, over and above what was collected, is not taxable and must be refunded. This decision underscores the importance of adhering to the statutory provisions concerning service tax exemptions for electricity transmission services.
The ruling brings relief to M/s S. Chatterjee & Sons, ensuring the refund of excess service tax payments and clarifying the scope of service tax obligations under the Finance Act. Legal representatives for the appellant, Shri Arun Kumar Agarwal and Ms. Pinky Khemka, expressed satisfaction with the outcome, which affirms the applicability of the negative list exemption for their client's services.
This decision serves as a precedent for other entities involved in similar works contract services, emphasizing the recognition of statutory exemptions and the rights of service providers to claim refunds for excess tax payments.
Bottom Line:
Works contract service provided for transmission or distribution of electricity is exempted from service tax under Clause (k) of Section 66D of the Finance Act, 1994 and relevant notifications.
Statutory provision(s): Finance Act, 1994, Section 66D, Notification No. 45/2010-ST dated 20.07.2010, Notification No. 25/2012-ST dated 20.06.2012.
