2024 (11) TMI 525 - AT - Service Tax

Tribunal Rules Generator Charges Not Taxable, Clarifies Rental Service Tax Scope; Appellant Wins Appeal, No Penalty Imposed.

The Tribunal set aside the impugned order, ruling in favor of the appellant. It held that service tax is not payable on generator charges under 'renting ... Demand of service tax invoking extended period of limitation - Service tax as payable on generator charges under the category of 'renting of immovable property service' and car renting and maintenance charges under the category of 'rent-a-cab service' Generator Charges - HELD THAT:- We find that the generator charges has been recovered by the appellant from the tenant for power cuts/failures, when there is a electricity failure. This electricity charges have been recorded by the appellant as providing electricity to that tenant from whom the appellant has lesser provider as a lessee. As the generator is owned by the appellant, therefore, the renting expenses are paid by the appellant and as the generator is a movable property, it can be put anywhere in the building. Therefore, the generator cannot be termed as “Immovable Property”. Accordingly, the same is not liable to pay service tax as the generator charges are under the category of “renting of immovable property service”. Therefore, the appellant is not liable to pay service tax on the generator charges under the category of “renting of immovable property service”. Rent-a-cab Service - With regard to demand under the category of “rent-a-cab service”, we find that the appellant is not engaged in the business of rent-a-cab service. Moreover, the appellant is recovering the amount for day to day for maintenance charges of vehicle of car renting, which is owned by the appellant for their own firm, wherein the appellant is one of the partner. In that circumstances, we hold that the appellant is not engaged in the business of rent-a-cab service. Therefore, no service tax is leviable under the category of “rent-a-cab service”. As the demand of service tax is not sustainable against the appellant, no penalty can be imposed on the appellant. Issues:1. Whether service tax is payable on generator charges under the category of 'renting of immovable property service.'2. Whether service tax is payable on car renting and maintenance charges under the category of 'rent-a-cab service.'3. Whether the extended period of limitation can be invoked for demanding service tax.Analysis:Issue 1: Generator ChargesThe appellant contested that service tax cannot be levied on the generator charges under the category of 'renting of immovable property service' as the generator is owned by them. The Tribunal observed that the generator charges were for providing electricity during power cuts, and as the generator is movable and owned by the appellant, it does not fall under the definition of 'immovable property.' Therefore, the Tribunal held that the appellant is not liable to pay service tax on the generator charges under the said category.Issue 2: Rent-a-cab ServiceRegarding the demand under the 'rent-a-cab service' category, the appellant argued that they were not engaged in the business of rent-a-cab service. The Tribunal noted that the appellant was receiving amounts for vehicle maintenance for their own firm, where the appellant was a partner. It was established that the appellant was not operating as a rent-a-cab service provider. Consequently, the Tribunal ruled that no service tax is payable under the 'rent-a-cab service' category.Issue 3: Extended Period of LimitationThe appellant contended that they were under a genuine belief that no service tax was due on the car renting and maintenance charges. The Tribunal considered this argument but ultimately found in favor of the appellant on both the generator and car charges. As the demand for service tax was deemed unsustainable, the Tribunal concluded that no penalty could be imposed on the appellant.In conclusion, the Tribunal set aside the impugned order and allowed the appeal, providing relief to the appellant. The judgment clarified that the appellant was not liable to pay service tax on the generator charges or the car renting and maintenance charges under the respective categories.