Custom, Excise & Service Tax Tribunal
M/S Stg Softex Pvt Ltd vs Noida on 10 March, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
(E-Hearing)
Service Tax Appeal No.70755 of 2025
(Arising out of Order-in-Appeal No.NOI-ST-APPL-NOI-001-88-25-26, dated -
30.06.2025 passed by Commissioner (Appeals), CGST & Central Excise,
Noida)
M/s STG Softex Pvt. Ltd. .....Appellant
(ATS Tower, Plot No-16 Sector-135,
Gautam Buddha Nagar, Uttar Pradesh 201304)
VERSUS
Commissioner, CGST & Central Excise, Noida
....Respondent
(GST Bhawan, IRCON Building, Plot No.-C-232,
A/2-A/3, Sector-48, Gautam Budh Nagar, Noida-201301)
APPEARANCE:
Shri Kapil Vaish, Chartered Accountant for the Appellant
Shri A. K. Choudhary, Authorized Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
FINAL ORDER NO.-70066/2026
DATE OF HEARING : 29.01.2026
DATE OF DECISION : 10.03.2026
P. K. CHOUDHARY:
The present appeal has been filed by the Appellant
assailing the Order-In-Appeal No. NOI-ST-APPL-NOI-001-88-25-
26, dated -30.06.2025 passed by Commissioner (Appeals), CGST
& Central Excise, Noida.
2. The facts of the case in brief are that the Appellants are
having their premises at Plot No.16 ATS Tower Sector 135,
Noida. The said premises had been rented out to various tenants
under lease agreement. The Appellants were engaged in renting
2 Service Tax Appeal No.70755 of 2025
of immovable property as well as providing maintenance
services, electricity and power backup to their tenants/lessee.
3. During the course of audit of the records to the Appellant
for the Period from October 2015 to June 2017, it was revealed
that the Appellants had:-
(i) Not reversed CENVAT Credit amounting to Rs 4,79,059/- on
the input invoices on which payments have been made after 3
months.
(ii) Not discharged their liability of interest of Rs.42,989/- on
delayed payment of Service Tax during 2015-16 to 2017-18.
(iii) Taken excess CENVAT Credit of Rs.1,16,461/- in their ST-3
Return in the Financial Year 2017-18.
(iv) Not discharged their liability of interest of Rs.4,148/- on
delayed payment of Service Tax on rental bills.
(v) Not discharged their liability of Service Tax of Rs.24,33,363/-
on receipts against electricity and power backup charged
through Diesel Generating Set1.
4. Show Cause Notice2 dated 19.04.2021 was issued. The
Adjudicating Authority as well as the Appellate Authority
confirmed the demand of CENVAT Credit as proposed in the SCN.
Since the said amount of Rs.4,79,059/- was already deposited
by the Appellant-Assessee, the same was appropriated.
5. He also passed the following order:-
ORDER
(i) I confirm the demand of CENVAT credit of Rs 4,79,059/- under the provisions of Section 73 of the Finance Act, 1994 read with Rule 14 of CENVAT credit Rules 2004. Since the said amount has already been deposited by the party, 1 DG set 2 SCN 3 Service Tax Appeal No.70755 of 2025 therefore, I appropriate the same against the aforesaid confirmed demand.
(ii) I confirm the demand of interest of Rs.5,89,240/-in r/o (i) above, and order the recovery of the same under the provisions of Section 75 of the Finance Act, 1994.
(iii) I impose penalty of Rs. 4,79,059/- upon M/s STG Softex Pvt. Ltd., ATS Tower, Plot No. 16, Sector 135, Noida under Section 78 of the Finance Act, 1994 as discussed above
(iv) I confirm the demand of interest of Rs.42,989/- for delayed payment of Service Tax under the provisions of Section 75 of the Finance Act, 1994. Since the said amount has already been deposited by the party, therefore I appropriate the same against the aforesaid confirmed demand of interest.
(v) I confirm the demand of CFNVAT credit of Rs.1,16,461/- under the provisions of Section 73 of the Finance Act, 1994 read with Rule 14 of CENVAT credit Rules 2004. Since the said amount has already been deposited by the party, therefore, I appropriate the same against the aforesaid confirmed demand.
(vi) I confirm the demand and order the recovery of interest of Rs.1,43,247/- in r/o demand of CENVAT credit at S.No.
(v) above, amounting to Rs.1,16,461/-, under the provisions of Section 75 of the Finance Act, 1994.
(vii) I impose penalty of Rs.1,16,461/- upon M/s STG Softex Pvt. Ltd., ATS Tower, Plot No. 16, Sector 135, Noida under Section 78 of the Finance Act, 1994 as discussed above.
(viii) I confirm the demand of interest of Rs.4,148/ under the provisions of Section 75 of the Finance Act, 1994. Since 4 Service Tax Appeal No.70755 of 2025 the said amount has already been deposited by the party, therefore, I appropriate the same against the aforesaid confirmed demand of interest.
(ix) I confirm the demand of Service tax of Rs.24,33,363/- and order the recovery of the same under the provisions of Section 73 of the Finance Act, 1994.
(x) I confirm the demand of interest in r/o confirmed Service tax liability of Rs.24,33,363/-, and order the recovery of the same under the provisions of Section 75 of the Finance Act, 1994.
(xi) I impose penalty of Rs.24,33,363/- upon M/s STG Softex Pvt Ltd, ATS Tower, Plot No. 16, Sector 135, Noida under Section 78 of the Finance Act, 1994 as discussed above.
6. Being aggrieved, the Appellant-Assessee filed appeal before the First Appellate Authority and the learned Commissioner (Appeals) vide the impugned Order-In-Appeal rejected the appeal and upheld the Order-In-Original. Hence, the present appeal before the Tribunal.
7. I find that the Adjudicating Authority as well as the Appellate Authority has confirmed the demand of Rs.30,28,883/- towards excess claimed/inadmissible CENVAT Credit and short paid Service Tax under Section 73 of the Act read with Rule 14 of the CENVAT Credit Rules. It also demanded interest and equal penalty have been imposed under section 78 of the Act. Amount of Rs.6,42,657/- already deposited has been appropriated.
8. The learned Chartered Accountant appearing on behalf of the Appellant submitted that the Appellant had been holding Service Tax Registration and had been filing Service Tax Returns regularly. They are having an electricity connection and also having a DG set for power backup. It has been providing 5 Service Tax Appeal No.70755 of 2025 electricity to tenants through sub meters and had been raising separate invoices. Service Tax had neither been charged nor paid on the amount towards electricity charges.
9. It is his submission that electricity is goods and is not covered in the definition of 'Service' as given in section 65 (B)
44. In support of his submissions, he relied upon following decisions to contend that Service Tax could not be demanded on sale of electricity.
(i) Final Order No 70329-70330/2024 dt 07-06-2024 in case of M/s Shipra Estate Ltd & Jai Krishan Estates Developers Pvt Ltd.
(ii) ICC Reality (India) Pvt. Ltd. Vs CCE reported in 2013(32) STR 427.
(iii) Logix Soft Tel Pvt. Ltd. Vs CCE reported in 2019 (20) GSTL 545.
(iv) Electronics Technology Parks Vs CCE reported in 2022 (56) GSTL 182.
10. With regards to the disallowance of CENVAT Credit of Rs. Rs.4,79,059/- (on the ground that payment had been made after 3 months) and the demand of Rs.1,16,461 (on the ground that CENVAT Credit had been excess taken); he submitted that the demand (including the demand on supply of electricity) is barred by limitation.
11. He also submitted that for demanding Service Tax and/or disallowing CENVAT Credit for the period October 2015 to June 2017, SCN has been issued on 19.04.2021. The entire demand is beyond the normal limitation period of 30 Months. He also contended that since the Appellants have been regularly filing ST-3 Returns, the extended period of limitation could not have 6 Service Tax Appeal No.70755 of 2025 been invoked. In support of his submissions, he relied upon following decisions of the Tribunal :-
(a) Final Order No 70645/2025 dated 11.09.2025 in case of Vijay Kumar Bhalla.
(6) Final Order No 51088/2023 dated 21-08-2023 in case of M/s G D Goenka Pvt Ltd.
12. Learned Departmental Representative appearing on behalf of the Revenue justified the impugned order and prayed that the appeal filed by the Appellant, being devoid of any merits, may be dismissed.
13. Heard both the sides and perused the appeal records.
14. I find that the main issue in this appeal is as to whether Service Tax could be demanded on supply of electricity to the tenants. In the present case, Appellant has obtained a single connection from PVVNL and have also installed a DG set for power backup. Electricity is supplied through sub meters. On perusal of sample bills available in the appeal paper book, it is noticed that Appellants have charged towards value of electricity on the basis of units consumed by the tenants. There is no dispute that electricity falls under chapter heading 2716 of Central Excise Tariff. It has consistently been held by the Hon'ble Supreme Court in the case of (i) State of Andra Pradesh Vs NTPC Ltd Reported in 2002 TIOL 107 SC-ST and (ii) Commissioner of Sales Tax Indore Vs Madhya Pradesh Electricity Board, Jabalpur reported in A.I.R 1970 S.C 732, that electricity is goods. Service Tax is payable on provision of service. The definition of service specifically excludes transfer of title in goods.
15. I also find that the issue regarding demand of Service Tax on supply of electricity is no more res integra. This issue has been dealt with by the Division Bench of the Tribunal in the case of M/s Shipra Estate Ltd & Jai Krishan Estate in Service Tax 7 Service Tax Appeal No.70755 of 2025 Appeal No.70795 of 2016 & Service Tax Appeal No.71101 of 2018 having Final Order No 70329-70330/2024. Relevant paragraphs are reproduced as under-
"4.18 Issue No. 4 - demand of service tax on supply of electricity through DG Set.
(i) The SCN had been issued demanding service tax on supply of electricity through D G Set for the period upto 30-
06-2012 (i.e. pre era of negative services). The learned Commissioner observed that it is not a simple sale of electricity generated by D G Set. As per commitment of builder made at the time of allotment of flats, they are under an obligation to provide power backup to flat buye A person residing at 24th floor of the building cannot get access without a lift and to keep the lift operative on 24/7, basis the responsibility is casted on the builder. The services of D G Set installed in residential complex are meant for only residents and utilities of such residential complex. He further observed that in case of residential complex, it is obligatory on part of builder to provide backup and resident is also bound to pay service charges at a mutually agreed rate for such services. In the said transaction, service agreement pre dominates. After making these observations, the learned Commissioner confirms the demand of service tax on supply of electricity through D G Set.
4.19 The learned Chartered Accountant submitted that Appellants had installed a D G Set from where electricity is supplied to the residents in case of power cut. Amount is charged on the basis of electricity consumed. He further submitted that electricity is goods. It falls under chapter heading 27160000 of Central Excise Tariff and is liable to NIL rate of Central Excise Duty. For the period upto 30.06.2012 Notification No.12/2003 dated 20.06.2003 exempted so much of the value of all taxable service as is equal to the value of goods and materials sold by service 8 Service Tax Appeal No.70755 of 2025 provider to the recipient of service, subject to the condition that there is documentary proof specifically indicating the value of said goods. He relied the decision of this Tribunal in case of ICC Reality (India) Pvt. Ltd. Vs. CCE reported in 2013 (32) S.T.R. 427 and submitted that supply of electricity being goods, service tax cannot be demanded on the same. On a specific query from the Bench, the learned counsel clarifies that they have installed pre paid meters and the amount for supply of electricity is charged on the basis of units consumed by the individual resident. As regards electricity consumed in common areas or for operating the lift during shutdown, the corresponding expenses are charged by way of maintenance or repair charges. We find that the issue regarding liability for payment of service tax on supply of electricity generated through DG set in case of power failure is no more res integra. This Tribunal in the case of ICC reality India (P.) Ltd. Vs. CCE, Pune reported in 2013 (32) S.T.R. 427 has held that service tax cannot be charged on electricity charges collected from the tenants. Para 9 and para 10 of the said order reads as under:-
"9. We have gone through the Lease Agreements. As per the terms and conditions of the Lease Agreements, the tenants have to pay electricity charges directly to the MSEB and the appellants are also providing electricity through generator set in case there is a power failure and the appellants are charging for the same. We find that electricity is specifically covered under Tariff Heading 27 of the Central Excise Tariff Act. We find that as per the provisions of Maharashtra Value Added Tax Act, 2002, electricity is also covered under Schedule A Sr. No. 20 and charged to Nil rate of tax. In view of this, we find the electricity is goods chargeable to duty under Central Excise Tariff as well as under the Maharashtra Value Added Tax Act, 2002. Therefore, the supply of electricity to tenant 9 Service Tax Appeal No.70755 of 2025 amounts to sale of goods and not supply of service. Further the Notification No.12/2003-S.T., dated 20-6-2003 exempt from Service Tax, any value of goods supplied by service provider to service recipient. Further we find that the Commissioner of Central Excise Pune-III vide Order- inOriginal dated 28-11-2011 relied upon by the appellants dropped the proceedings which were initiated on the same ground in the case of M/s. Panchshil Tech Park Ltd. The Commissioner of Central Excise in the adjudication order held that electricity is goods and chargeable to Nil excise duty. The decision of the adjudicating authority is accepted by the Revenue as per the communication dated 26-9- 2012 by the Commissioner of Central Excise, Pune-III. The present appellants are also under the jurisdiction of PuneIII Commissionerate". 10. In view of the above discussion, we find merit in the contention of the appellants that the electricity charges collected from the tenants cannot be formed part of the assessable value for the purpose of Service Tax as provider of renting of immovable properties"
4.20. In view of the aforesaid decision of Tribunal, we hold that service tax cannot be demanded on supply of electricity through D G Set. Accordingly, demand on this count is set aside alongwith setting aside of penalty."
16. The next issue is whether the demands could be raised by invoking extended period of limitation. There is no dispute that the Appellants have been filing ST3 Returns on a regular basis and the demand has been raised consequent to audit. The learned Commissioner (Appeals) vide the impugned Order-In- Appeal has upheld the invocation of extended period after observing that the issues on which the Service Tax/CENVAT Credit demands have been confirmed in the impugned order were detected only during the course of departmental audit of the Appellant's records. It is also observed by the learned Commissioner (Appeals) that these issues were neither disclosed 10 Service Tax Appeal No.70755 of 2025 in the Appellant's ST-3 Returns nor otherwise brought to the notice of the Department.
17. I find that a similar matter on limitation had come up for consideration before the Division Bench of this Tribunal in the case of G. D. Goenka Pvt. Ltd. (Supra). In the said case also, the demand had been raised consequent to the audit. The extended period of limitation was invoked on the ground that under self assessment, the Appellant-Assessee was required to assess its own tax due on the services provided by it and file returns under Section 70.
18. The Division Bench while referring to the decision of the Hon'ble Supreme Court in the case of Pushpam Pharmaceuticals Company Vs. CCE, Mumbai 1995 (78) E.L.T. 401 (S.C.) made detailed observation for holding that extended period of limitation could not have been invoked. The relevant paras of the judgement are reproduced below for ready reference:-
"16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect selfassessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence 11 Service Tax Appeal No.70755 of 2025 cannot be presumed simply because the assessee is operating under self-assessment.
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19. It has also been pointed out that but for the audit, the allegedly irregularly availed CENVAT credit would not have come to light. It is incorrect to say that but for the audit, the alleged irregular availment of CENVAT credit would not have come to light. It is undisputed that the appellant has been selfassessing service tax and filing ST-3 Returns. Unlike the officers, the assessee is not an expert in taxation and can only be expected to pay service tax and file returns as per its understanding of the law. The remedy against any potential wrong assessment of service tax by the assessee is the scrutiny of the Return and best judgment assessment by the Central Excise Officer under section 72. This section reads as follows:
"72. Best judgment assessment. If any person, liable to pay service tax,--
(a) fails to furnish the return under section 70;
(b) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder, the Central Excise Officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment."
20. Thus, 'the central excise officer' has an obligation to make his best judgment if either the assessee fails to furnish the return or, having filed the return, fails to assess tax in accordance with the Act and Rules. To determine if the assessee had failed to correctly assess the service tax, 12 Service Tax Appeal No.70755 of 2025 the central excise officer has to scrutinize the returns. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed. For this purpose, the officer may require the assessee to produce accounts, documents and other evidence he may deem necessary. Thus, in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72.
21. This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs7 in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows:
1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in his report on Indirect Taxation8 . The observation made in the context of Central Excise but also found to be relevant to Service Tax is reproduced below:
It is the view that assessment should be the primary function of the Central Excise Officers. Selfassessment on the part of the taxpayer is only a facility and cannot and 13 Service Tax Appeal No.70755 of 2025 must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt, audit and anti-
evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers.
(emphasis supplied)
22. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is neither legally correct nor is it consistent with the CBEC's own instructions to its officers."
19. Finally, the Division Bench allowed the appeal of the Appellant on limitation by summing up its observation in Para 25 as under:-
"25. To sum up:
a) The appellant assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else.
b) It is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 and issue an SCN under Section 73 within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer.
c) Although the Central Excise Officer is empowered to scrutinise all the Returns call for records and if necessary, make the best judgment assessment, if, as per the instructions of CBIC, the officer does not conduct a detailed scrutiny of same Returns and as a result is unable to 14 Service Tax Appeal No.70755 of 2025 discover any short payment of tax within the period of limitation, neither the assessee nor the officer is responsible for such loss of revenue. Such a loss of Revenue is the risk taken by the Board as a matter of policy.
d) Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent.
e) Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit."
20. I find that Appellant's case on limitation is squarely covered by the aforesaid order of the Tribunal in the case of G.D.Goenka Pvt. Ltd. I, therefore, hold that Service Tax/ CENVAT Credit could not have been demanded by invoking the extended period of limitation. As the demand itself is being set aside, penalties imposed under Section 78 is also set aside.
21. In view of the above discussion, the appeal filed by the Appellant is allowed with consequential relief as per law.
(Pronounced in open court on 10.03.2026) Sd/-
(P. K. CHOUDHARY) MEMBER (JUDICIAL) Nihal