Service Tax on Electricity Provided by Malls or Commercial

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TUSHAR SUKHIA (Querist)
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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.

Dayal

Dayal (Expert)
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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.

TUSHAR SUKHIA

TUSHAR SUKHIA (Querist)
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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.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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24 July 2025 Great question! Here’s the breakdown regarding **Service Tax on Electricity Provided by Malls or Commercial Complexes**:

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### 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.

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### 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*.

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### 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**.

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### 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.

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### 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.**

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### 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.

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### **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 |

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### 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.

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If you want, I can help you draft a clarification letter to the mall or help with tax implications for your office.

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Does this clear your doubt? Would you like help with anything else?

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