service tax on re-imbursement of electricity Bills, water charges

[Rishabh Gugale]

Dear Sir,

Incase of partly renting of immovable property the building is rented out on monthly rental charges on which service tax is charged and paid to the Govt.Authority.  The electricity is billed only to the single meter holder (owner) and is then partly recovered as re-imbursement from the tenant.  Also the water charges is also recovered partly as re-imbursement of expenses.  Kindly advise whether these charges attracts service tax ? If yes how as these are not services provided and are the re-imbursement of actual expenses without any mark up ?  Will it be correct to drag these re-imbursement under Business Support services by the authorities ?

Please support any case law on these liines.

Rishabh

[YAGAY andSUN]

If such deemed service are not mentioned in the negative list or in the Mega Notification, then, it will be taxable otherwise not.

AI Summary

Service tax on reimbursed utility charges may apply where such reimbursed services are not excluded by the negative list. Reimbursement of electricity and water charges recovered from a tenant alongside rented premises may attract Service Tax if those reimbursements constitute a deemed or taxable service that is not excluded by the negative list or the applicable Mega Notification; if such reimbursements fall within exclusions, they will not be taxable.