TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1456
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....r renting of Immovable Property Services has been confirmed in terms of Section 75 of the Finance Act, 1994. Interest of Rs.1,03,220/- for Maintenance or Repair Services in terms of Section 75 of the Finance Act, 1994. Penalty of Rs. 10,000/- has also been imposed under Section 77 of the Finance Act, 1994. Aggrieved against the confirmation of the said demands of service tax along with interest and penalty, M/s. Middleton Leaseholders Put. Ltd (hereinafter referred as the appellant), has filed this appeal. 2. The Appellant states that they are registered with the Service Tax Authority and are having the Registration No. AABCM7806LSD001 for providing taxable service under the category of "Maintenance and Repairing Services". They have not taken registration for rendering 'Renting of immovable property service' till 2011. The Appellant states that they had taken the building 'Jeevan Deep 'belongs to Life Corporation of India (hereinafter referred to as "LICI") on lease rent and had rented the same on sub-lease to different companies to whom various floors or rooms of the building were given on rent. 2.1. During the course of scrutiny of records of the appellant for the period 2009-....
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....which were incurred during the course of providing taxable services. These expenses collected were merely incidental expenses which were reimbursed by the member companies for discharging certain expenses and reimbursing their staff for performing extra/overtime duties. The appellant submits that as per Rule 5 of the Service Tax (Determination of Value) Rules, 2006, this incidental recovery of expenses cannot be added to taxable value of service. In support of this claim, the Appellant relied on the judgment of the Hon'ble Supreme Court in the case of Union of India vs Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) G.S.T.L. 401 (S.C.), wherein it has been held that reimbursement expenses received on actual basis are not includable in the assessable value for the purpose of payment of service tax. Accordingly, the appellant submitted that the demand confirmed in the impugned order on this count is not sustainable. 3.2. Regarding the demand of interest of Rs. 13,72,096/- confirmed for delayed payment of Service Tax for renting of Immovable Property Services, the Appellant states that during the period the issue of liability of service tax was being agitated before ....
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....nce, the said Rule 5 is reproduced below:- "Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service". 6.1. In the present case, we find that apart from rent, the appellant also collect expenses which were incurred by them during the course of providing the taxable services. We find that these expenses collected were merely incidental expenses which were reimbursed by the member companies for their staff performing extra/overtime duties. We observe that as per Rule 5 of the Service Tax (Determination of Value) Rules, 2006, this incidental recovery of expenses cannot be added to taxable value of service. We observe that the Hon'ble Supreme Court has taken this view in the case of Union of India vs Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) G.S.T.L. 401 (S.C.), wherein it has been held as under:- "24. In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In othe....
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....ed Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. " 6.2. Thus, by relying on the decision of the Hon'ble Apex Court cited supra, we hold that the demand of Service Tax of Rs. 41,99,006/- confirmed on the value of 'Other Expenses' & 'Extra Hour Service Charges' for the financial years 2009-10 to 2012-13, in the impugned order is not sustainable and hence we set aside the same. 6.3. Regarding the demand of interest of Rs. 13,72,096/- confirmed for delayed payment of Service Tax for renting of Immovable Property Services, we observe that during the period the issue of liability of service tax was being agitated before various forums. The Hon'ble High court of Delhi in its order dated 18.04.2009 in the case of Home Solutions Retail India Ltd. & Others v. UOI had struck down the levy as not being a service. Subsequently, an amendment was made to the 'Renting of immovable property service' in order to overcome the earlier judgment of the Hon'ble High court of Delhi. Accordingly, we....
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....n offence retrospectively. There were clearly judgments, decrees or orders of Courts and Tribunals or other authorities, which required to be neutralized by the Validation Clause. We can only assume that judgments, decree or orders etc. had, in fact, held that persons situate like the appellants were not liable as service providers. This is also clear from the Explanation to the Validation Section which says that no act or acts on the part of any person shall be punishable as an offence which would have been so punishable if the Section had not come into force. 8. The liability to pay interest would only arise on default and is really in the nature of a quasi-punishment. Such liability although created retrospectively could not entail the punishment of payment of interest with retrospective effect. 9. It is also to be noted that the Tribunal itself deleted the imposition of penalty imposed by the Commissioner (Appeals) on the appellants on this ground. 10. Besides, if the liability has been created under the amended section by virtue of sub- section (2) of Section 148 of the Finance Act, 2002, it must be given effect to wholly. The section expressly makes the assessee liable ....
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.... was under obligation to discharge the Tax liability from 16-11-1997 to 1st June, 1998 only on May, 2000 and consequently he was not liable to pay interest prior to May, 2000 i.e. the date on which the duty was payable. In the instant case the interest has been realized from 16- 11-1997 which is contrary to law. The appellant is liable to pay interest from May, 2000 onwards. Accordingly I partially allow the appeal with the direction that the appellant will be liable to pay interest from May, 2000. Consequently, I allow the appeal in above terms with consequential relief to appellant. 11. In Asean Aromatics Pvt. Ltd. (supra). The Tribunal observed as under : 2. In the present appeal, the assessee has challenged the demand of interest and the imposition of penalties. The ld. Counsel has supported the challenge against the penalties by relying on "Explanation to Section 132 of the Finance Act, 2001". He has relied on the decision of the Apex Court in Star India Pvt. Ltd. v. Commissioner - 2006 (1) S.T.R. 73 (S.C.) in support of the assessee's challenge against the levy of interest. We have heard the ld. JCDR also. 3. After considering the submissions, we note that the erstwhile....
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....i-punishment. In other words, by virtue of the Apex Court's ruling, the benefit of Explanation to Section 132 of the Finance Act, 2001 gets extended to interest also. The impugned order gets set aside and this appeal is allowed. 12. In this regard the validation clause in Finance Bill, 2010 is noteworthy and reproduced as under : 76. Any action taken or anything done or omitted to be done or purported to have been taken or done or omitted to be done under sub-clause (zzzz) of clause (105) of Section 65 of the Finance Act, 1994, at any time during the period commencing on and from the 1st day of June, 2007 and ending with the day, the Finance Bill, 2010 receives the assent of the President, shall be deemed to be and deemed always to have been, for all purposes, as validly and effectively taken or done or omitted to be done as if the amendment made in sub-clause (zzzz) of clause (105) of Section 65, by sub-item (i) of item (h) of sub-clause (5) of clause (A) of Section 75 of the Finance Act, 2010 had been in force at all material times and, accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, (a) any action ....
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....ind that the same view has been taken by the CESTAT, Chennai in the case of Commissioner, Namakkal Municipality vs Commissioner of Gst & Central Excise, Salem (2024) 22 Centax 490 (Tri.-Mad), wherein it has been held as under : 7. We find that this is a case where a retrospective amendment was made to the definition of 'Renting of Immovable Property Service' in order to clarify the legislative intent and also bring in certainty in tax liability. The amendment clarified that the activity of renting of immovable property per se would also constitute a taxable service under the relevant clause. It was given retrospective effect from 01.06.2007. Para 9 of Annexure - B of D.O.F. No.334/1/2010-TRU, dated 26/02/2010 which clarifies the matter is reproduced below; "9. Renting of immovable property service 9.1 This service was introduced in 2007 with a view to tax the commercial use of immovable property hired on rent. The tax on rent paid is available as input credit if the commercial activity involves provision of taxable service or manufacture of dutiable goods. However, the Hon'ble High court of Delhi in its order dated 18.04.2009 in the case of Home Solutions Retail I....
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....created retrospectively could not entail the punishment of payment of interest with retrospective effect." 8. We find, as sated in the DO letter of the Joint Secretary (Tax Research Unit-II) dated 26/02/2010, that an amendment was made to the 'Renting of immovable property service' in order to overcome the earlier judgment of the Hon'ble High court of Delhi in its order dated 18.04.2009 in the case of Home Solutions Retail India Ltd. & Others v. UOI wherein the Hon'ble Court it had struck down the levy as not being a service. This being so liability although created retrospectively could not entail the punishment of payment of interest with retrospective effect as decreed by the Apex Court in Star India (P) Ltd. (supra). Further, in para 10 of the said judgment, it is stated that where the amendment expressly makes a provision for the payment of the retrospectively amended tax liability within a specified time, in such circumstance, the appellant is not entitled to pay interest if the monies are paid within the said date and that they would be liable to pay interest only after the said date. We find that no provision of time has been made in the present amendment ....