Partnership firm liable for Service Tax on power charges collected without establishing pure agency status.

The appellant, a partnership firm renting immovable property, was held liable for Service Tax on power charges collected. The Tribunal ruled that the appellant failed to establish acting as a pure agent for the difference in amount collected and paid to BESCOM for power charges. They were directed to deposit a specified amount within eight weeks, with the balance dues waived pending appeal. The judgment clarified tax liability on power charges and the treatment of specific expenses in the context of Service Tax obligations for the appellant.

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Issues:
1. Liability of Service Tax on power charges collected by the appellant.
2. Whether the appellant acted as a pure agent in collecting power charges.
3. Treatment of the difference in amount collected and paid to BESCOM for power charges.

Analysis:
1. The appellant, a partnership firm renting immovable property, was paying Service Tax on rents and maintenance charges. However, a demand for Service Tax of &8377; 2,47,18,037/- was imposed for the period 2006-07 to 2010-11 due to alleged non-payment on power charges collected. The appellant argued that power charges were reimbursements, not rent, and hence not taxable.

2. The appellant claimed the difference in amount collected and paid to BESCOM was for backup power generation expenses. They contended this was a recovery of actual expenses for providing backup power and maintenance of the generator, which could be verified. The lease agreement allowed power charge collection based on actual consumption, indicating reimbursement of expenses.

3. The Tribunal noted that under the Finance Act, only actual expenses incurred and paid on behalf of the service receiver could be reduced. While BESCOM charges were considered as paid to a pure agent, the &8377; 95,89,015/- difference was for generator power, not expenses on behalf of tenants. Lack of evidence on actual expenses incurred meant the appellant failed to establish acting as a pure agent for this amount. Thus, they were directed to deposit &8377; 15 lakhs within eight weeks, with the balance dues waived pending appeal.

In conclusion, the judgment clarified the tax liability on power charges, the concept of acting as a pure agent, and the treatment of specific expenses in the context of Service Tax obligations for a partnership firm renting immovable property.

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