Charging of Service Tax by the IT Park appears to be perfectly tenable as the IT park purchases electricity from the TNEB and thereafter sells the same to the units situated within their IT Park and thereby rendering service falling within the ambit of the service tax provisions of the Finance Act please. Therefore, irrespective of whether TNEB is charging service tax on its consumers or not, I.T.Park who is the service provider in the instant case would be liable to service tax.
09 February 2009
The matter is very simple. The food court is collecting rent from you along with the Electicity charges and they are making service tax on the overall amount.
Service tax will be charged on renting of immovable property and this includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course of furtherance of business.
According to a senior official, it is only logical to exempt a pure revenue sharing contract without a rental component from service tax. This is because law makers have gone by the principle of Ejusdem Generis-a Latin word "of the same kind" used to interpret loosely written statute. In this case, the phrase "similar arrangement" will cover activities like renting, leasing, letting out or licensing of immovable property.