Meter Reading, Billing & Disconnection Services Are Ancillary To Electricity Distribution; Exempt From Service Tax: CESTAT Allahabad
The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that services, such as meter reading, billing, and connection/disconnection of electricity, are ancillary services of transmission and distribution of electricity and service tax is not payable for these services. P.K. Choudhary (Judicial Member) examined whether the services such as...
The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that services, such as meter reading, billing, and connection/disconnection of electricity, are ancillary services of transmission and distribution of electricity and service tax is not payable for these services.
P.K. Choudhary (Judicial Member) examined whether the services such as meter reading, collection of revenue, connection and disconnection of electricity supply would be covered under the scope of transmission and distribution of electricity as specified under Section 66D of the Negative List of Services of Finance Act, 1994.
In this case, the assessee/appellant was engaged by Superintending Engineer, Electricity Distribution Circle, Madhyanchal Vidyut Vitaran Nigam Ltd., Unnao, for the collection of electricity bills, connection and disconnection of power supply and other miscellaneous activities such as mounting and commissioning of LT Distribution Boxes, erection of electricity poles and collection of revenue, etc.
The Commissioner has observed that the assessee has provided Franchisee services and is therefore liable for payment of service tax.
The Advocate for the assessee submitted that the assessee has been engaged by M/s MVVNL for these miscellaneous essential public utility services in relation to transmission and distribution of electricity on their behalf.
The advocate further stated that these services, ancillary to transmission and distribution of electricity, are specified under Section 66D(k) of the Finance Act, 1994 and thus exempted. Accordingly, the assessee is not liable to pay service tax for the said services.
The Tribunal referred to Sub-Clause 3 of Section 66F of the Finance Act and observed that the miscellaneous essential services, such as meter reading, collection of revenue, connection and disconnection of electricity supply on behalf of M/s MVVNL, are in the nature of a bundled service which would be treated as if provided by the assessee on their behalf.
The services of supply and distribution of electricity provided by M/s MVVNL are exempted under Section 66D(k) and therefore the taxability of the related/ancillary services provided by the contractor/Appellant on their behalf are required to be given the same treatment as would have been given to the said services directly provided by the transmission and distribution of electricity company i.e. M/s MVVNL, stated the bench.
The Tribunal held that the miscellaneous services provided by the assessee on behalf of M/s MVVNL would be treated as related and ancillary services of transmission and distribution of electricity and would qualify for exemption under Section 66D(k) of the Act.
In view of the above, the Tribunal allowed the appeal.
Case Title: M/s Chauhan Enterprises v. Commissioner, Central Excise & Service Tax, Lucknow
Case Number: Service Tax Appeal No.70427 of 2025
Counsel for Appellant/ Assessee: Dushyant Kumar and Vipnesh Kumar
Counsel for Respondent/ Department: A. K. Choudhary