2023 (12) TMI 684

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.... payable on receipt basis and so the appellant discharged service tax on the basis of collections from the customers. As per the arrangement with the customers, the appellant also facilitated renting of premises on behalf of the customers and took refundable security deposits from customers and subsequently paid it to the landlord. 3. An audit of the service tax records for Financial Year 2008-09 was conducted by the Director General of Audit, Central Revenue, New Delhi from 08.12.2009 to 14.12.2009 and an Audit Report dated 03.01.2011 was issued. The appellant, by a letter dated 28.05.2011, filed a reply to the Audit Report explaining why the audit paragraphs were not sustainable. 4. However, a show cause notice dated 21.10.2011 was issued to the appellant with the following proposals: (i) Service tax on advances: From the financial statements for the Financial Years 2006-07, 2007-08 and 2008-09, it appeared that the appellant had not paid taxes on the „advances from customers‟ as appearing on the last date of the financial year. A demand of service tax to the tune of Rs. 70,72,703/-was, therefore, proposed. The details are as follows: Financial Year Year end adv....

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.... levied against advances as service tax had been paid on all the collection received during the relevant period; (ii) The Commissioner committed an error in confirming the service tax demand on refundable security deposits and the imprest amount; (iii) The Commissioner committed an error in denying the adjustment of excess service tax merely because the appellant had not intimated this fact to the department; (iv) The extended period of limitation could not have been invoked in the facts and circumstances of the case; (v) The show cause notice was issued after a lapse of two years from the conclusion of the proceedings and so deserves to be set aside on this ground alone; and (vi) The Commissioner committed an error in imposing penalty and interest. 9. Shri Harshvardhan, learned authorized representative appearing for the department, however, supported the impugned order and submitted that the Commissioner, after referring to the contract dated 15.12.2004 entered into by the appellant with ICICI Bank, correctly held that the amount received by the appellant were advances and, therefore, service tax was required to be paid. Learned authorised representative also submitted....

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..... 15. In Vaatikaa Construction Pvt. Ltd. vs. Pr. Commr. of S.T., Delhi-III 2020 (43) G.S.T.L. 533 (Tri.-Del.), the Tribunal held that year end balance in the balance sheet does not represent the advance received during the year. 16. The figures stated by the appellant had also been duly verified by a Chartered Accountant and a certificate had also been issued. This certificate was not accepted by the Commissioner merely because the appellant did not substantiate it with invoices and other relevant records. What needs to be noticed is that the certificate issued by the Chartered Accountant is based on documents, namely the bank statement, TDS statement and the service challans. The Tribunal has repeatedly held that a certificate issued by the Chartered Accountant is admissible as evidence for factual information and without rejecting the same, it cannot be brushed aside. 17. The appellant had also pointed out in the written submissions dated 30.08.2011 filed before the Commissioner that the balances for the financial years 2009-10 and 2010-11 pertained to refundable security deposits, on which transactions service tax had been paid. According to the appellant, out of the total ad....

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....of providing services, which amount would not be subjected to levy of service tax. 21. The Commissioner has, however, not excluded this amount from the taxable value holding that all expenditure or cost incurred by the service provider in the course of providing a taxable service form an integral part of the taxable value and rule 5 of the Service Tax (Determination of Value) Rules 2006 the 2006 Rules has been relied upon for this purpose. 22. The submission advanced by the learned counsel for the appellant also deserves to be accepted. 23. The amount collected as imprest from the customers is towards various expenditure incurred during the provision of services such as hotel, food and telephone bills. This expenditure or costs incurred by the service provider in the course of providing the taxable service cannot be considered as the gross amount charged by the service provider „for such service‟ provided by him, and accordingly not taxable under section 67. 24. In this connection reliance can be placed on the decisions of the Supreme Court in Commissioner of Service Tax vs. Bhayana Builders (P) Ltd. 2018 (10) G.S.T.L. 118 (S.C.)  and Intercontinental Consultan....