SERVICE TAX ON REIMBURSEMENT OF ELECTRICITY CHARGES

[SUMEDH AYARE]

I AM A SERVICE RECEIVER. 

WE HAVE TAKEN NEW OFFICE & B.E.S.T IS ISSING ELECTRICITY BILL IN FAVOUR OF XYZ  &  XYZ IN TURN ISSUES BILL IN OUR FAVOUR BY CHARGING SERVICE TAX. (SINCE THE METER IS NOT IN OUR NAME - IT WILL TAKE SOME TIME)

WHETHER I AM LIABLE TO PAY SERVICE TAX ON REIMBURSEMENT OF ELECTRICITY CHARGES TO XYZ.

[YAGAY andSUN]

If it is being reimbursed on actual basis, then, no need to pay the service tax.  This aspect has been clarified in a  recent judgment.

 Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India (2012) 12 TMI 150 (Delhi)

 

AI Summary

Service tax on reimbursements: bona fide pass-through electricity reimbursements without mark-up are not taxable. Reimbursements of electricity charges that are bona fide pass-through recoveries of actual expenditure, made without mark-up or separate service element, are not subject to service tax; therefore a recipient reimbursing electricity billed in a third party's name need not pay service tax on such actual reimbursements, subject to factual verification.