Power back-up services to attract VAT

We develop small residential complexes. Typically, we apply for a single electricity meter for the entire building. We also provide 100% power back- up to ensure continuous supply of electricity to residents. For such facility, we recover a fixed amount every month from flat owners. Should we deposit service tax for such charges under the negative list regime?

From the information provided by you and on the preliminary analysis of your activity, it appears to us that you are providing power back up to all the apartments in the complex. We understand that such charges are an integral part of the agreement entered into with the flat owners/residents. In this case, one may adopt a position that since the power back-up services are provided along with other maintenance services such charges may attract service tax.

Alternatively, one may also view the transaction to be separate for supply of power back-up to the residents. In such a case, one may contend that such services may be opted for by the residents and are charged for separately. Additionally, electricity being in the nature of goods, supply of electricity would not amount to provision of services but sale of goods/trading. Therefore, charges for providing such power back-up would not attract service tax but VAT. However, the position is litigative. A definite position on this issue would depend upon on the precise facts of the

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