Transmission or distribution of electricity by an electricity transmission or distribution utility services under service tax

By | November 22, 2013

Transmission or distribution of electricity by an electricity transmission or distribution utility services under service tax

An ‘electricity transmission or distribution utility’ has also been defined in section 65B of the Act. It includes the following –

  • The Central Electricity Authority
  • A State Electricity Board
  • The Central Transmission Utility (CTU)
  • A State Transmission Utility (STU) notified under the Electricity Act, 2003
  • A distribution or transmission licensee licensed under the said Act
  • Any other entity entrusted with such function by the Central or State Government

As per section 66D (k) of finance act, 1994 this service has been brought in negative list of service tax, hence no service tax is imposable on the service of transmission or distribution of electricity by an electricity transmission or distribution utility service.

But in order to take advantage of this entry following two conditions need to be satisfied cumulatively:-

  • Activity shall be in the nature of transmission or distribution of electricity,
  • It shall be provided by electricity transmission or distribution utility

If charges are collected by a developer or a housing society for distribution of electricity within a residential complex then such services would not be covered under this entry but if The developer or the housing society 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 then it would be covered under this entry.

If the services provided by way installation of gen sets or similar equipment by private contractors for distribution of electricity then it would not be covered under negative list.

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