No Service Tax on Reimbursement of Electricity Charges Collected on Actual Consumption Basis: CESTAT [Read Order]
CESTAT noted that the charges were collected on actual consumption and the appellant functioned as a ‘pure agent’.
![No Service Tax on Reimbursement of Electricity Charges Collected on Actual Consumption Basis: CESTAT [Read Order]](https://images.taxscan.in/h-upload/2025/11/03/2101917-no-service-tax-reimbursement-electricity-charges-actual-consumption-basis-cestat-taxscan.webp "No Service Tax on Reimbursement of Electricity Charges Collected on Actual Consumption Basis: CESTAT [Read Order]")
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that reimbursement of electricity charges collected from occupiers on the basis of actual consumption does not attract service tax where the amounts are paid to the electricity supplier and the appellant merely acted as a collecting agent. Also Read: CESTAT OrdersFresh Verification of...
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that reimbursement of electricity charges collected from occupiers on the basis of actual consumption does not attract service tax where the amounts are paid to the electricity supplier and the appellant merely acted as a collecting agent.
This Tribunal affirmed the non-applicability of service tax while adjudicating appeals filed by M/s Forum Project Holding Pvt. Ltd. and its Manager (Accounts), Deepak Agarwal against an order of the Commissioner of Service Tax Audit, Kolkata by which the Commissioner had confirmed aggregate service tax demands of ₹5,58,73,725 for the period 2011-15. Among the contested items was a demand of ₹4,25,95,982 relating to reimbursement of electricity, water and diesel generator charges.
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Tarun Chatterjee and Sneha Das appeared for the appellant and placed on record a Chartered Accountant’s certificate and ledger entries showing that amounts paid by the appellant to the West Bengal State Electricity Distribution Company Limited (WBSEDCL) exceeded the amounts collected from the occupiers.
It was contended that the sums were collected on an actual consumption basis and thus the appellant acted as a pure agent or mere conduit in the facilitation of the electricity supply and not as a service provider who is liable to service tax; accordingly the appellants prayed for setting aside service tax demand along with interest and penalties.
D. Sue represented the Revenue and reiterated the findings in the order of the adjudicating authority.
A Bench of Ashok Jindal, Member (Judicial) and K. Anpazhakan, Member (Technical), examined the documentary record and the terms under which charges were collected and paid.
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The Tribunal found relevance in the material and evidence adduced by the appellant to contest their case and noted that the issue had been earlier discussed by the Tribunal in the appellant’s own group concern’s case in Forum Mall Management Services Pvt Ltd VS. Commissioner of Service Tax (2024) where it was held that such reimbursements are not leviable to service tax when collected on actual consumption and the appellant functioned as a ‘pure agent’.
Accordingly, CESTAT concluded that the appellant had not rendered a taxable service in respect of electricity reimbursement and set aside the service tax demand of ₹4,25,95,982 pertaining to electricity, water and diesel charges along with all consequential interest and penalties confirmed in the impugned order.
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