service tax on re-imbursement of electricity charges

[GOPAL HARLALKA]

Whether service tax is payble on the re-imbursement of electricity charges in a housing complex, where electricity charges are collected and paid to the electricity provider on behalf of the residents ?

 

 

[YAGAY andSUN]

Re-imbursement of expenses on acutal basis won't for part of the taxable amount for the purpose of calculating the Service Tax while provide the taxable service.  This aspect has been clarified in the following judgment:-

 

As a major relief to all the service providers, Delhi High Court in Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India (2012) 12 TMI 150 (Delhi) has over ruled this provision stating that imposing Service Tax on reimbursements is not in the scheme of law and such a provision is ultra vires (illegal) the Act itself.

[sanjeev bajaj]

 No Service Tax as the provider of service is acting as Pure Agent according to Service Tax( Determination of Valuation) Rules, 2006 and fulfils the conditions laid down in Rule  5 of the said rules.

 

AI Summary

Service Tax Not Applicable on Electricity Reimbursements by Housing Complexes, Acting as 'Pure Agent' Under Rule 5, Service Tax Valuation Rules 2006. A query was raised about whether service tax is applicable on the reimbursement of electricity charges collected by a housing complex and paid to the electricity provider on behalf of residents. One response referenced a Delhi High Court judgment, stating that imposing service tax on reimbursements is not lawful. Another response highlighted that the service provider acts as a 'Pure Agent' under the Service Tax Valuation Rules, 2006, and fulfills the conditions in Rule 5, thus exempting them from paying service tax on these reimbursements.