TaxTMI 
TaxTMI 
2021 (7) TMI 1095
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....e following demands of Service tax along with interest on the assessee:- (i) Rs. 1,23,38,130 (Rupee One Crore Twenty three Lakhs Thirty Eight Thousand One Hundred and Thirty Only) for the period 5/06 to 3/11, under the category of Business Support Service; (ii) Rs. 11, 07, 24,133 (Rupees eleven Crores Seven Lakhs Twenty Four Thousand One Hundred and Thirty Three Only), for the period 6/07 to 3/11, under Renting of immovable property service; (iii) Rs. 19,08,987 (Rupees Nineteen Lakhs Eight Thousand Nine Hundred and Eighty Seven Only), while dropping remaining amount of Rs. 4,50,289, for the period 4/08 to 3/11 and Rs. 3,87,14,111 (Rupees Three Crores Eighty Seven Lakhs Fourteen Thousand One Hundred and Eleven Only), for the period from 5/06 to 3/11, under Business Support Service; (iv) Rs. 31,345 (Rupees Thirty One Thousand Three Hundred and forty Five only), for the period from 5/06 to 3/08, under the category of Sale of Space or Time for Advertisement Service; (v) Rs. 2, 28,191/- (Rupees Two Lakhs Twenty Eight Thousand One Hundred and Ninety one only), for the period from 4/06 to 3/....
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.... 1994 taxable from 01/05/2006. Show-cause notice proposed to include various charges for supply of water, electricity, diesel generator charges, air-conditioning charges, car park charges etc. and concluded that there was short payment of service tax to the extent of Rs. 10,14,58,189/- under the proposed re-classification. The show-cause notice proposed to demand service tax on the following:- (i) Differential Service Tax on re-classification under the category of "Support Services of Business or Commerce" by including the Rent/lease Charges for building/rent, car Parking charges, Campus Maintenance Charges, Generator Charges, Electricity Charges, Water charges, Air-conditioning charges. (ii) Commitment Charges representing forfeiture of deposit made by Companies for lease of land for construction of their own buildings for use for commercial purposes, but agreements terminated due to breach of condition of non-payment of lease amount; (iii) Amount reimbursed by KSITIL, a Government of Kerala funded company; (iv) Notional Interest on the refundable deposits made by the Lessees.; (v) Sale of....
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....sumables used for generation and supply of electricity. The learned counsel then referred to the definition of 'Renting of Immovable Property' as provided in Section 65(105)(zzzz) of the Finance Act and submitted that the Commissioner has held in para 13(iii) that the services rendered by the assessee is something more than renting and it is also held in para 13(iv) that activities like Technopark Business Incubation Center (TBIC), Technopark Software Engineering Competency Centre (TSECC), etc. are such which clearly distinguish from mere renting and in para 13(v), that the lessees are not merely acquiring office space, but are buying into an environment with common facilities, power supply, common area, common maintenance and other common amenities and taking the whole ambit of transactions, as per the Commissioner, the service is more appropriately classifiable under 'Business Support Service' rather than renting of immovable property as claimed by the assessee. He further submitted that the show-cause notice proposes to include price/value of various elements but Commissioner in para 14(ii) held that as regards rent and building maintenance, there is no dispute but t....
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....hennai Vs. Ticel Bio Park Ltd. [2018-TIOL-2195-CESTAT-MAD] ix. Anandram Developers Pvt. Ltd. Vs. CST [2017(6) GSTL 75 (Tri. Chennai)] x. Chitrali Properties Pvt. Ltd. Vs. CCE [2013-TIOL-236-CESTATMUM] xi. Golf Links Embassy Business Park Vs. CST, Bangalore [(2012) 25 Taxmann.com 533 (Bang-CESTAT)] xii. Radius Water Ltd. Vs. CCE [2015(37) STR 409 (Tri. Del.)] He further submitted that the findings recorded by the Commissioner in Para 13(iv) and 13(v) and the reasoning given by the Commissioner is completely flawed, contrary to law and beyond the plain language of the statutory definition of 'renting of immovable property'. Rental or lease rental of the building takes into consideration the common facilities and the maintenance of the buildings. He further submitted that the Commissioner has accepted the fact that the assessee is a licensed distributor of electricity and in Para 14(iv) of the impugned order, he has allowed retrospective exemption under Notification No.45/2010-ST for distribution of electricity up to 21/06/2010 and further prospective exemption w.e.f. 22.06.2010 is allowed under Notification No....
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....i. State of Andhra Pradesh Vs. National Thermal Power Corporation [2002 AIR SCN 1956] iii. ICC Realty India Pvt. Ltd. Vs. CCE, Pune-III [2013(32) STR 427 (Tri. Mum.)] iv. Kiran Gems Pvt. Ltd. Vs. CCE&ST, Surat [2019(25) GSTL 62 (Tri. Mum.)] v. Anandram Developers Pvt. Ltd. Vs. CST [2017(6) GSTL 75 (Tri. Chennai)] vi. Radius Water Ltd. Vs. CCE [2015(37) STR 409 (Tri. Del.)] vii. Mundra Port & SEZ Ltd. [2012(27) STR 171 (Tri. Mum.)] viii. Air Liquide North India Ltd. Vs. CCE, Jaipur [2017(4) GSTL 230 (Tri. Del.)] ix. CCE Vs. Tata Tech [2008(11) STR 449 (SC)] x. UOI Vs. Intercontinental Consultants & Technocrats Ltd. [2018(10) GSTL 401 (SC)] 4.3. Issue No.2: Whether amount received from Kerala State IT Infrastructure Ltd. (KSITIL) is towards rendering "Business Support Service"? Learned counsel submitted that KSITIL is a 100% State Government owned company acting as an apex body for developing IT infrastructure in the state of Kerala under whose supervision assessee/appellant's Technopark is established. He further submitted that as per the arrangements between the assesse....
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....that there is no finding that notional interest on refundable deposit has resulted in undervaluation of the service of renting of immovable property and there is no evidence of nexus between the deposit amount and the rental. Learned counsel also relied upon few decisions wherein it has been held that inclusion of notional interest on refundable security deposit is contrary to settled law. He relied upon the following decisions:- i. Murali Realtors Pvt. Ltd. Vs. CCE, Pune [2015(37) STR 618 (Tri. Mumba)] ii. Karnataka Industrial Areas Development Board Vs. CCT, Bangalore [2020(40) GSTL 33 (Tri. Bang.)] iii. Samir Rajendra Shah Vs. CCE, Kolhapur [2015(37) STR 154 (Tri. Mum] iv. Ashiana Maintenance Services LLP Vs. CCE [2019(24) GSTL 47 (Tri. Del.)] v. Commissioner of Income Tax Vs. JK Investor (Bombay) Ltd. [248 ITR 723 (Bom)] vi. CCE, Mumbai-III Vs. ISPL Industries Ltd. [2003(154) ELT 3 (SC)] 4.5. Issue No.4: Taxability on sale of space or time for advertisement (May 2006 to March 2008). Learned counsel submitted that the sale of space or time for advertisement is independently clas....
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.... present show-cause notice dt. 07.10.2011, previously audits were conducted by the Department on various occasions and the Department wanted to classify the services of the appellant under Business Support Services but the same was resisted by the appellant vide their letter dt. 26/02/2009 and the details of the said correspondence have been recorded in para 21 & 22 of the impugned order which according to the learned counsel clearly shows that the appellant being a State Government of Kerala undertaking has not concealed any information from the Department and the Department was aware of the activities of the appellant from 2007 onwards but did not issue the show-cause notice earlier. He further submitted that the appellant has been discharging service tax on renting of immovable property, maintenance charges etc. and the Department has sought to change the classification and include various services provided by other independent entities in the value of service. The dispute is purely of interpretation and relating to classification of service and there is no suppression of facts or contravention of the Finance Act, 1994 with intention to evade payment of service tax. ....
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....nt charges was the policy of the Project Implementation Board and he then referred to the Minutes of 72nd Meeting of the Technopark held on 05.07.2007, wherein forfeiture of commitment charges was decided and the decision of the Board was conveyed to the allottee. The stand of the Department is that the amounts were received as forfeiture and are for services whereas the stand of the assessee is that the amount forfeited is penal in nature and not for renting of immovable property. Since there is non-performance by the allottee for which cancellation fee was charged, there was no service rendered. Learned counsel also referred to Sections 73 and 74 of the Contract Act, 1972 which provides for compensation for loss or damage caused by breach of contract. He further submitted that the amount forfeited is not a consideration as the effect of breach of contract cannot be treated as provision of service. Since the contract is cancelled, there is no service per se rendered in terms of Section 65B(44) and Section 65E(e). In support of this submission, he relied upon the following decisions:- i. Lemon Tree Hotel Vs. CC [2020(34) GSTL 220 (Tri. Del.)] ....
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....commerce; but does not include- (a) vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Explanation 2.-For the purposes of this sub-clause, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce; Section 65(104c) "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracki....
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....ning and supply of electricity by operating DG sets. The charges are collected separately. We have also examined the sample invoices annexed by the assessee for collection of different charges relating to water, air conditioning and electricity operating DG sets. These charges are apportioned as per the area occupied by each tenant or lessee and are charged under separate invoices. We also find that these clauses are mentioned in the Lease Deed annexed with the show-cause notice wherein it is clearly stated that lessee's usage of AC as measured by Building Measurement Management System shall be the basis for determining the AC charges. As per the Department, assessee has rendered composite services whereas as per the assessee, they have rendered only 'Renting of Immovable Property Service'. Further as per the clause (1) of Section 65A which states that "a taxable service would be classified in the category which gives the most specific description of the service provided" is applicable in the case of the assessee. Further we find that the Tribunal as well as the Apex Court has held that supply of electricity amounts to sale of goods. Furthe....
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....issue has been considered by the Tribunal in the case of Mundra Port & Special Economic zone Ltd. cited supra wherein the Tribunal has held that in order to bring the appellant under the category of support services of business and commerce, it is necessary to show that they are providing services relatable to business of the client. Further the Tribunal in the case of Air Liquide North India Ltd. cited supra, held in Para 10 that infrastructural facilities covered under the Business Support Service are mainly administrative and office related support. The type of activities like putting up and managing gas storage facility in industrial unit are not fitting into overall scope of the infrastructural support service as contemplated by the inclusive definition given in the explanation. This decision of the Tribunal has been approved by the Hon'ble High Court of Rajasthan as reported in CCE, Jaipur Vs. Air Liquide North India Ltd. [2019(27) GSTL 194 (Raj.)]. Further we find that the reliance by the Department on Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 to consider such expenses or costs as consideration and to be included in the value of se....
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....vernment was delayed and therefore in the meantime, the assessee incurred expenses which were entirely reversed by KSITIL when the State Government released funds to KSITIL. Further we find that the finding of the learned Commissioner that KSITIL is an associated enterprise is not tenable in law because KSITIL is an independent company. Appellant has not provided any service to KSITIL for consideration. In the absence of any service, the reimbursement of expenses incurred by the appellant cannot be subjected to levy of service tax. Therefore the demand of service tax of Rs. 19,08,987/- is without any basis. 6.4. Coming to issue No.3, whether notional interest on refundable deposits can be included in the value of taxable supply for levy of service tax, we find that lease rental was the consideration for renting of premises and the security deposit was in the nature of security against default in payment of lease rental, damage to building, fitting, fixtures etc. We do not find any nexus between renting of premises, the prescribed lease rental and the security deposit. In fact, security deposit amount is refunded on termination of lease a....
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....we find that the appellant has only arranged operation of public transport system for a nominal charge and it is M/s. Cosmos Travels who has permit for operation of the contract carriage or tourist vehicle and the taxable service is provided by them. From the various documents on record, we have seen that M/s. Cosmos Travels have collected service tax and remitted the same and the assessee not being service provider is not liable to pay service tax. 6.7. As far as denial of Cenvat credit on various input services is concerned, we find that the Commissioner has denied the credit partly on the ground that the credit relates to construction service for the period prior to 01.04.2011. Further, the cenvat credit has been denied on the ground that there is a defect in credit claiming document as service tax registration was not printed and the same was written in hand. In this regard, we find that the assessee has submitted declarations from respective vendors confirming remittances of service tax by them under respective registration numbers and has also cited various decisions to buttress their argument that the services fall in the definition of input servic....
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....s regarding nonpayment of service tax under the category of maintenance and repair services. On an adjourned appearance on 20/07/2007 statement was recorded from our Assistant Finance Officer Mr. N. Viswanathan, where activities carried out by Technopark were discussed in detail and statement obtained but no further action initiated. ii. Department Internal Auditors conducted the audit for the period covering October 2003 to September 2008 during Oct-Nov 2008. iii. Letter OC 56/2009 dt.28.01.2009 Superintendent, Service Tax Group C, Trivandrum communicating objection raised by Internal Audit containing three issues 1. Service tax liability under Business support Service, 2. Service tax liability under Business Support Service in respect of commitment charges forfeited during 2007-08 and 3. Service tax liability under selling of space or time for Advertisement service. iv. Letter ETPK/FIN/SerTax/2008-09 dt.26.02.2009 addressed to Superintendent, Group C furnishing our reply to the three issues raised in the above said letter in line with our current views. v. Further details were called for vide OC No.99/2009 dt.27.02.2009.....
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....ssessee's case falls in the proviso to Section 73. Further we find that the assessee-appellant is an entity promoted by Govt. of Kerala. Therefore extended period of limitation cannot be invoked alleging suppression of facts or mala fide intention in view of the decision in the case of Tamil Nadu Housing Board Vs. CCE, Madras cited supra. Other decisions relied upon by the assessee-appellant are given herein below:- i. CCE Vs. Singh Transporters [2018(13) GSTL J40 (SC)] ii. Madras Cements Ltd. Vs. CCE [2019(367) ELT A255(SC)] iii. CCE, Baroda Vs. Cotspun Ltd. [1999(113) ELT 353 (SC)] iv. Karnataka Industrial Areas Development Board Vs. CCT, Bangalore [2020(40) GSTL 33 (Tri. Bang.)] v. Tamil Nadu Housing Board Vs. CCE, Madras [1994(74) ELT 9 (SC); vi. BSNL Vs. CST Bangalore [2009(9) STR 499 (Tri. Bang.)] vii. Uniworth Textiles Ltd. Vs. CCE, Raipur [2013(288) ELT 161 (SC)] viii. Gangadhar Bulk Movers Pvt. Ltd. Vs. CCE, Nagpur [2012(27) STR 258 (Tri. Mum.)] ix. CST Vs. Vijay Television (P) Ltd. [2015-TIOL-874HC-MAD-ST] 7. As far as interest an....