Electricity reimbursement in a renting arrangement is not includible in service tax value when recovered on actual basis.

Amounts recovered on an actual basis as electricity reimbursement in a renting arrangement for a leased conveyor system were held not to form part of the assessable value for service tax, because they did not constitute consideration for the taxable service. The Tribunal followed its earlier view that electricity supplied to the recipient in such circumstances is outside the taxable service value and cannot be added to the service tax base. On that reasoning, inclusion of the electricity charges was unsustainable and the Revenue's challenge failed.

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Issues: Whether electricity charges recovered from tenants for use of the leased conveyor system formed part of the assessable value for service tax under the renting arrangement.

Analysis: The electricity charges were recovered on actual basis under the arrangement between the parties and were treated as reimbursement rather than consideration for the renting service. The Tribunal followed the earlier view that electricity supplied to the recipient in such circumstances is not part of the taxable service value and cannot be added to the assessable value for service tax.

Conclusion: The electricity charges did not form part of the assessable value and the demand was not sustainable. The appeal by the Revenue failed.

Final Conclusion: The impugned order setting aside inclusion of electricity charges in the service tax base was sustained and the Revenue's challenge was rejected.

Ratio Decidendi: Amounts recovered as actual reimbursement for electricity supplied in connection with a renting arrangement are not includible in the assessable value for service tax when they do not constitute consideration for the taxable service.

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