TaxTMI 
TaxTMI 
2019 (11) TMI 248
X X X X Extracts X X X X
X X X X Extracts X X X X
....t claims to be engaged in facility management services in relation to management and maintenance. 3. Against the professional fees charged for the above services, the Appellant discharged service tax liability but no Service Tax was paid on expenses incurred for service in relation to horticulture, housekeeping and cleaning, rent-a-cab operator, supply of manpower, maintenance of immovable property, security, pest control as the Appellant claimed them to be reimbursements or out of pocket expenses. 4. Two show cause notices dated 30 September 2008 and 22 October 2008 were issued to the Appellant. The period involved in the first show cause notice is from 2003-04 upto 2006-07, while the period involved in the second show cause notice is from 1 April 2003 to 30 September 2005. 5. The first show cause notice mentions that the Appellant had not paid Service Tax with regard to services in relation to horticulture, housekeeping and cleaning, pest control, supply of manpower, rent-a-cab, maintenance of immovable property, even though they were part and parcel on the activities relating to Real Estate Agent Service. The show cause notice also mentions that the Appellant had been availin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Dated 22.10.2008 Total For period 2003-04 to 2006-07 1.4.2003 to 30.9.2005 Service Tax demand Proposed Real Estate Agent Services Security Agency, Rent-A-Cab Services Reimbursement Expenses (01.04.2003 to 30.09.2005) 5,68,00,738 1,57,53,488 7,25,54,226 Cenvat Credit reversal (Jan 2006 to March 2007) 3,09,79,339 NIL 3,09,79,339 Total 8,77,80,077 1,57,53,488 10,35,33,488 LESS: Amount paid & appropriated in order-in-original 1,57,53,488 Demand confirmed in order-in-original Reimbursement Expenses 4,10,47,250 1,57,53,488 5,68,00,738 Cenvat Credit reversal 3,09,79,339 NIL 3,09,79,339 Total Demand Disputed 7,20,26,589 1,57,53,488 8,77,80,339 10. Shri A.K. Batra, learned Chartered Accountant appearing for the Appellant submitted: (i) there was a wrong classification of reimbursement expenditure under taxable category "real estate agent services". The Appellant is engaged in facilitation services by appointing a facilitation manager to supervise and manage the management/ maintenance of immovable property. For the actual execution, the Appellant takes the services of various vendors. The services for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ended that it does not call for any interference in this appeal. 12. The submissions advanced by the Chartered Accountant for the Appellant and the learned Authorised Representative of the Department have been considered. 13. The Appellant claims to be providing facility management services in relation to management and maintenance of immoveable property. It has been discharging the Service Tax liability on the professional fees charged for the said service. It did not discharge Service Tax liability on certain expenses for service in relation to horticulture, housekeeping and cleaning, rent-a-cab operator, supply of manpower, maintenance of immoveable property, security and pest control as the Appellant claimed that the amount was reimbursed only. However, during the investigation the Appellant deposited Service Tax of Rs. 1,57,53,488/- with interest for services in relation to security and rent-a-cab operator. It also discharged Service Tax liability on management and maintenance of immoveable property services w.e.f. 16 June 2005, when an amendment was made in the definition of management, maintenance or repair services. 14. The Department claimed that the above expenditure i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....movable property services, the Appellant started paying Service Tax w.e.f 16 June 2005 from which date it became a taxable service. Regarding the remaining services, the Appellant did not pay Service Tax as the Appellant claimed that the amount was reimbursed. 17. Section 67 of the Act deals with valuation of taxable services for charging Service Tax. Sub-section (1) of section 67 provides that where Service Tax is chargeable on any taxable service with reference to its value, then such value shall, where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by the service provider. It is, therefore, clear that only such amount is subject to Service Tax which represents consideration for provision of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax. 18. Section 67 of the Act was considered and explained by the Delhi High Court in Intercontinental Consultancy and Technocrafts (P) Ltd. vs. Union of India 2013 (38) STR 375. The Appellant therein was providing consulting engineering services. It received payment not o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... permits subordinate legislation to be enacted as was done by Rule 5. It needs to be noted that prior to 19 April, 2006, in the absence of a Rule, the valuation was required to be done as per the provisions of section 67 of the Act. The Supreme Court noticed that the charging section 66 provides that there shall be levied Service Tax @ 12% of the value of taxable services referred to in the sub-clauses of Section 65 and collected in such manner as may be prescribed. Thus, the Service Tax is on the "value of taxable services" and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the Service Tax. It is for this reason that the Supreme Court observed that the expression "such" occurring in section 67 of the Act assumes importance. It is in this context that the Supreme Court in paragraph 26 observed that the authority has to find what is the gross amount charged for providing "such" taxable services and so any other amount which is calculated not for providing such taxable service cannot be a part of that valuation as the amount is not calculated for providing "such taxable service." This, according to th....