Pure agent electricity reimbursements are not taxable service consideration, including DG set supply and related tenant goods.

Electricity distributed for onward supply was treated as non-taxable, and amounts collected as reimbursement through sub-meters and paid onward to the Electricity Department were regarded as part of a pure agent arrangement. On that basis, receipts relating to electricity supplied through DG sets were also treated as outside service tax. The same treatment was applied to amounts collected for consumable goods and electrical goods supplied to tenants, and the service tax demands were set aside.

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Issues: Whether service tax was leviable on the amounts collected towards sale or reimbursement of electricity charges, including electricity supplied through DG sets, and on the amounts collected towards consumable goods and electrical goods supplied to tenants.

Analysis: The activity of distribution of electricity was treated as not taxable under service tax, and the record showed that the amounts collected were towards electricity supplied through sub-meters from a common meter arrangement and payment made to the Electricity Department. The collection was therefore treated as part of a pure agent arrangement. Since the sale of electricity itself was not exigible to service tax, the same treatment was applied to electricity supplied from DG sets and to the related supply of consumable and electrical goods to tenants.

Conclusion: The appellants were held not liable to pay service tax on the disputed electricity-related collections or on the supply of consumable and electrical goods, and the demands were set aside.

Final Conclusion: The appeals succeeded and the impugned orders were annulled to the extent of the disputed levy, with consequential relief following in accordance with law.

Ratio Decidendi: Where electricity is merely distributed and amounts are collected as a pure agent for onward payment, such receipts do not constitute taxable service consideration for levy of service tax.

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