service tax on rent

[pradip patwardhan]

Dear All,

If one partnership firm, given cold storage on rent to one Pvt ltd Company. The said company pays actual Electricity bill, water bill etc. of cold storage, directly to MSEB and Municipality respectively as per written agreement and pay only rent amount to Partnership firm(service provider)for using Cold storage as fixed by agreement. (Amount of rent is more than 10 Lakhs in F.Y.) I want to know, Is only rent amount is taxable under service tax or amount paid to MSEB & water bill is also taxable or not??Kindly clarify… 

Regards

pradip..

 

AI Summary

Service tax on rented facilities: reimbursements paid directly for utilities excluded, bundled payments form taxable consideration.
Where a facility is let and utilities are paid directly by the user under a written agreement, only the rent actually received by the owner is taxable; if the agreement bundles rent and utilities into a single payment to the owner, the gross amount is taxable because apportionment is not feasible. Determination of Value principles exclude bona fide reimbursable expenses, but the characterization of the agreement and the essentiality of utilities to the service affect tax treatment.