Reimbursements on electricity expenses from the occupants chargeable to Service tax

Recently, the issue of levibility of Service Tax on reimbursements on electricity expenses received from the occupants of a complex came before a Single Member Bench of the Hon’ble Calcutta High Court, wherein the Hon’ble High Court has upheld the levy of Service Tax on such transactions. [Srijan Realty (P) Ltd. v/s Commissioner of Service Tax, Service Tax Commissionerate II - Kolkata & Ors. W.P. No. 770 of 2015].

Issue: Whether the supply of electricity by the petitioner to the occupiers of “Galaxy Mall”, a commercial complex, is a service exigible to Service Tax under the Finance Act, 1994 (“the Finance Act”).

Facts & Background:

• The petitioner has a commercial complex developed and operated under the name and style of “Galaxy Mall” lying and situated at Asansol. The Commercial Complex has various occupants.

• In order to effect electric supply to the commercial complex, the petitioner entered into an agreement on October 26, 2010 with DPSC Ltd. (now known as Indian Power Corporation Ltd.).

• Such licensee provides electric supply through an 11KV substation installed at the commercial premises. The licensee raises a single consolidated electricity bill upon the petitioner.