Car parking fees excluded from service tax, electricity reimbursements not taxable, signage charges time-barred, CENVAT credit reversal unsustainable

CESTAT Kolkata allowed the appellant's appeal against service tax demands totaling Rs.9,79,096. The tribunal held that car parking fees are excluded from service tax following Delhi HC precedent, and demand was time-barred due to prior show cause notice on same issue. Electricity charge reimbursements were not taxable as appellant acted as pure agent. Signage charges demand was time-barred as facts were within department's knowledge, negating suppression. CENVAT credit reversal was unsustainable as full service tax was paid. All penalties and interest demands were set aside.

---

---

Issues Involved:
1. Demand of Service Tax on car parking charges under the category of 'renting of immovable property service'.
2. Demand of Service Tax on reimbursement of electricity charges under the category of 'management, maintenance and repair service'.
3. Demand of Service Tax on signage charges under the category of 'management, maintenance and repair service'.
4. Reversal of CENVAT Credit.
5. Interest on the demand of Service Tax on reimbursement of electricity charges.

Issue-wise Detailed Analysis:

1. Demand of Service Tax on Car Parking Charges:
The appellant-assessee was demanded Service Tax amounting to Rs. 8,99,864/- on car parking charges under the category of 'renting of immovable property service'. The assessee argued that this issue is no longer res integra as the Hon'ble Delhi High Court had decided in favor of the assessee in Mahesh Sunny Enterprises P. Ltd. v. Commissioner of Service Tax, New Delhi [2014 (34) S.T.R. 21 (Del.)], which excluded parking services from the taxable service definition. The Tribunal observed that the demand is also hit by limitation since a previous Show Cause Notice dated 31.12.2008 was already issued on the same matter, referencing the decision of the Hon'ble Apex Court in Nizam Sugar Factory v. Collector of Central Excise, A.P. [2006 (197) E.L.T. 465 (S.C.)]. Therefore, the demand was not sustainable on both the grounds of the merits and limitation.

2. Demand of Service Tax on Reimbursement of Electricity Charges:
The appellant-assessee was demanded Service Tax amounting to Rs. 42,03,908/- on reimbursement of electricity charges under the category of 'management, maintenance and repair service'. The assessee contended that these charges were collected on an actual consumption basis and paid to CESC Limited, acting as a 'Pure agent'. The Tribunal found that this issue was already decided in favor of the assessee in Choicest Enterprises Limited v. Commissioner of Service Tax, Kolkata, where it was held that no service tax is payable for providing electricity as it amounts to the sale of goods, not the supply of service. Thus, the demand was set aside.

3. Demand of Service Tax on Signage Charges:
The appellant-assessee was demanded Service Tax amounting to Rs. 36,790/- on signage charges under the category of 'management, maintenance and repair service' for the period from 01.10.2006 to 31.03.2009. The assessee argued that the demand was barred by limitation as the Show Cause Notice was issued on 06.01.2012. The Tribunal observed that the entire issue of collection of signage charges was well within the knowledge of the Department, and suppression of facts with the intention to evade tax was not established. Hence, the demand was not sustainable on the ground of limitation.

4. Reversal of CENVAT Credit:
The appellant-assessee was demanded a reversal of CENVAT Credit amounting to Rs. 30,534/-. The assessee submitted that they had paid Service Tax on the full invoice value and were thus eligible to avail full CENVAT Credit. The Tribunal observed that paying a lesser amount to the service provider does not disqualify the assessee from availing full Service Tax credit which has been paid to the exchequer. Therefore, the demand for reversal of CENVAT Credit was not sustainable.

5. Interest on the Demand of Service Tax on Reimbursement of Electricity Charges:
The Revenue filed an appeal against the non-charging of interest on the Service Tax amount of Rs. 42,03,908/- confirmed towards reimbursement of electricity charges. Since the demand itself was set aside, the Tribunal held that the question of demanding interest does not arise. Therefore, the appeal filed by the Revenue was rejected.

Conclusion:
The Tribunal allowed the appeal filed by the appellant-assessee and set aside all the demands and penalties confirmed in the impugned order. The appeal filed by the Revenue was rejected. The operative part of the order was pronounced in open court.

---