Service Tax on Electricity Provided by Malls or Commercial
This query is : Resolved
11 April 2008
I want to know is there is the service tax on the electricity provided by the malls or commercial building? My office is into one Mall or Shopping Complex & TATA is providing the electricity to this Mall but TATA has not charged any service tax. I have received the bill from the Mall inculding service Tax. Kindly solve my query.
19 April 2008
Providing electricity is not a service as it is already subject to a duty.
It will invariably increase the cost of services.
The mall cannot charge service tax as it is not a service, for use of space it is mandatory to include the element.
If the mall can establish that this cost is apportioned or if you have a separate meter installed the same can escape service tax as it is only reimbursment of expense and service is not involved.
It will invariably increase the cost of services.
The mall cannot charge service tax as it is not a service, for use of space it is mandatory to include the element.
If the mall can establish that this cost is apportioned or if you have a separate meter installed the same can escape service tax as it is only reimbursment of expense and service is not involved.
24 April 2008
I had checked with the concerned person of the Mall or shopping complex & according to him they are converting the electricity form High Tension to Low Tension & therefor the Service Tax is applicable on the same. Please advice is the service tax will be applicable now.
24 July 2025
Great question! Here’s the breakdown regarding **Service Tax on Electricity Provided by Malls or Commercial Complexes**:
---
### 1. **Electricity as a Good, Not a Service**
* Electricity itself is classified as a *good* (not a service).
* Therefore, **TATA Power (the electricity supplier)** charges **no service tax** on electricity bills — that is correct and expected.
---
### 2. **Electricity Supplied by the Mall to Tenants**
* When a **mall or commercial complex receives electricity** from the power company (TATA Power) and supplies it to tenants/offices, the question is whether the mall is providing a *service* or merely resupplying a *good*.
---
### 3. **Conversion from High Tension (HT) to Low Tension (LT)**
* The mall mentioned **converting electricity from High Tension (HT) to Low Tension (LT)**.
* This process involves **transformation and distribution**, which can be considered a **service**.
* Because the mall is not just passing on the electricity but is **providing additional facilities/services** (like transformation, distribution, maintenance of wiring, power backup, etc.), the charge for electricity by the mall can be treated as **consideration for a taxable service**.
---
### 4. **Service Tax Applicability on Electricity Charges from Mall**
* The mall’s **electricity charge to tenants usually includes:**
* Cost of electricity purchased from TATA Power (a pass-through cost)
* Charges for conversion, distribution, maintenance, infrastructure, etc. (a service component)
* **Service tax is applicable on the total amount charged by the mall to tenants**, including electricity charges, if it includes markup or service component.
---
### 5. **Legal and Tax Authority Position**
* The tax department treats this as a **taxable service under ‘Renting of Immovable Property’** or **‘Facilities provided in Commercial Complex’** where electricity supply is a facility bundled with property rental.
* The **service tax on electricity charges by malls or commercial complexes is applicable when electricity is supplied as part of the facilities provided to tenants, especially if any service component exists.**
---
### 6. **Why TATA Power Does NOT Charge Service Tax**
* Because TATA Power is the **original supplier of electricity (goods)**, not providing any taxable service beyond the supply.
* Their invoice is pure sale of goods (electricity), which is outside service tax.
---
### **Summary**
| Entity | Service Tax on Electricity Charges? |
| ---------------------------------------- | ---------------------------------------------------------------------------------------- |
| TATA Power (electricity supplier) | No (electricity is a good, no service tax) |
| Mall/commercial complex charging tenants | Yes, if it includes service component like conversion, distribution, maintenance, markup |
---
### What You Should Do
* Confirm with the mall if the electricity charges include conversion/distribution or just pass-through cost.
* If service tax is charged by the mall on electricity component, it is generally **correct**.
* Tenants paying service tax as part of the bill are typically considered paying for a *service* bundled with electricity supply.
---
If you want, I can help you draft a clarification letter to the mall or help with tax implications for your office.
---
Does this clear your doubt? Would you like help with anything else?
---
### 1. **Electricity as a Good, Not a Service**
* Electricity itself is classified as a *good* (not a service).
* Therefore, **TATA Power (the electricity supplier)** charges **no service tax** on electricity bills — that is correct and expected.
---
### 2. **Electricity Supplied by the Mall to Tenants**
* When a **mall or commercial complex receives electricity** from the power company (TATA Power) and supplies it to tenants/offices, the question is whether the mall is providing a *service* or merely resupplying a *good*.
---
### 3. **Conversion from High Tension (HT) to Low Tension (LT)**
* The mall mentioned **converting electricity from High Tension (HT) to Low Tension (LT)**.
* This process involves **transformation and distribution**, which can be considered a **service**.
* Because the mall is not just passing on the electricity but is **providing additional facilities/services** (like transformation, distribution, maintenance of wiring, power backup, etc.), the charge for electricity by the mall can be treated as **consideration for a taxable service**.
---
### 4. **Service Tax Applicability on Electricity Charges from Mall**
* The mall’s **electricity charge to tenants usually includes:**
* Cost of electricity purchased from TATA Power (a pass-through cost)
* Charges for conversion, distribution, maintenance, infrastructure, etc. (a service component)
* **Service tax is applicable on the total amount charged by the mall to tenants**, including electricity charges, if it includes markup or service component.
---
### 5. **Legal and Tax Authority Position**
* The tax department treats this as a **taxable service under ‘Renting of Immovable Property’** or **‘Facilities provided in Commercial Complex’** where electricity supply is a facility bundled with property rental.
* The **service tax on electricity charges by malls or commercial complexes is applicable when electricity is supplied as part of the facilities provided to tenants, especially if any service component exists.**
---
### 6. **Why TATA Power Does NOT Charge Service Tax**
* Because TATA Power is the **original supplier of electricity (goods)**, not providing any taxable service beyond the supply.
* Their invoice is pure sale of goods (electricity), which is outside service tax.
---
### **Summary**
| Entity | Service Tax on Electricity Charges? |
| ---------------------------------------- | ---------------------------------------------------------------------------------------- |
| TATA Power (electricity supplier) | No (electricity is a good, no service tax) |
| Mall/commercial complex charging tenants | Yes, if it includes service component like conversion, distribution, maintenance, markup |
---
### What You Should Do
* Confirm with the mall if the electricity charges include conversion/distribution or just pass-through cost.
* If service tax is charged by the mall on electricity component, it is generally **correct**.
* Tenants paying service tax as part of the bill are typically considered paying for a *service* bundled with electricity supply.
---
If you want, I can help you draft a clarification letter to the mall or help with tax implications for your office.
---
Does this clear your doubt? Would you like help with anything else?
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