The applicant Econ Hinjewadi Infrastructure (P.) Ltd is the owner of premises which have several units and were given on rent to various persons. The applicant has been paying service tax on the rent received from their tenants. The applicant is also involved in the activity of maintaining and repairing of the buildings and is paying service-tax on this activity also.
Apart from these, the applicant is under an obligation to supply electricity to its tenants and (for that) a common electricity connection has been taken by it from MSEB and separate meters installed in each premise and on the basis of reading in the meter the applicant is charging electricity charges from the tenants. When electricity is not being supplied by MSEB, the same is supplied through DG set to the tenants and on that also they are charging electricity charges from the tenants.
The Revenue is of the view that electricity charges recovered from their tenants is to be part of theservice of 'Renting of Immovable Property Service' and, therefore, a notice was issued and demand for service tax was confirmed against the applicant along with interest, apart from penalty of equivalent amount under section 78 of the Finance Act, 1994.
The contention of the applicant that electricity is 'goods' and the same shall not form part of taxableservice is clarified by the Notification no. 12/2003. Therefore, on this basis the Commissioner of Central Excise, Pune III opined that the applicant had made out a prima facie case for 100% waiver of the service tax levied and confirmed and penalty imposed thereon.
Econ Hinjewadi Infrastructure (P.) Ltd. v. Commissioner of Central Excise, Pune-III
Currently only stay order is issued. However, there are multiple properties where charging of DG supplied electricity is done separately and service- tax recovered on them.
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