TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1037
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....etails of the show cause notices are as under: Sl.No. SCN File no. Date of SCN Amount of S.Tax (including Cess) involved (Rs.) Outstanding Interest (Rs.) Recovery of Cenvat Credit (Rs.) Period 1 V(15)153/ST-Adjn/Commr/12 19.10.12 9435580 193624 67018 2007-08 to 2010-11 2 V(15)295/ST-Adjn/Commr/12/29416 17.12.12 10488070 45823 79555 2011-12 Total 1,99,23,650 2,39,447 1,46,573 2.1. The said notices were adjudicated by the Ld. Commissioner of CGST & CX, Kolkata - II Commissionerate, wherein the demands of service tax raised in the said notices were confirmed along with interest and penalties. 2.2. Aggrieved against the confirmation of the demands, the appellant has filed this appeal. 2.3. The appellant has furnished a summary of the demands contested in this appeal, which is shown in the following table: - Sl No Issues Service Tax demand (in Rs.) 1 Renting of immovable property - 2 Interest on Renting - 3 Maintenance 178,133.00 4 Interest on Maintenance - 5 Maintenance Deposit 415,648.00 6 Electricity Charges 3....
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.... of Notification No. 3/2011-S.T. dated 01.04.2011 is not sustainable. 3.2. Regarding the demand of Service Tax under the category of Management, Maintenance & Repair Service, the appellant submitted it is submitted by the appellant that they claimed reimbursement of expenses from the tenants towards the repairs and maintenance charges on actual basis, for the works carried out on the rented property and hence, no amount of tax is leviable, since, the reimbursement has been made on actual basis. It is submitted that on account of reimbursement of expenses, the appellant had claimed reimbursement of expenses for expenses incurred on behalf of the tenants and as such, on such reimbursement, there can be no levy of service tax and such amount ought to have been excluded from the taxable value; it is also pointed out by the appellant that Rule 5(1) of the Service Tax Valuation Rules, 2006, has been held to be ultra vires to that extent vide judgment of the Hon'ble Delhi High Court in the case of M/s Intercontinental Consultants and Technocrats Pvt Ltd vs UOI reported in 2013 (29) S.T.R. 9 (Del). 3.3. Regarding the demand of service tax under the category of Maintenance Deposits on....
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....e within the State. The appellant submits that the department has not alleged that the appellant has charged the electricity charges over and above what has actual been recorded in the energy meter. Thus, it is their plea that the electricity charges have been collected and deposited as a 'pure agent' and accordingly, they contend that the demand confirmed on account of this receipt is not sustainable. In this regard, reliance is placed by them on the judgment of this Tribunal in the case of TICEL Bio Park Limited vs. Commissioner of GST & Central Excise, Chennai South Commissionerate bearing Appeal No. ST/41125 and 41126 of 2015 wherein it has been categorically held that such reimbursable charges are not includible in total taxable value and that the demand of service tax cannot sustain. 3.5. Regarding the demand of service tax on account of non-payment of Service Tax on Construction of Residential Complex Service (Administrative Cost), the appellant submits that an amount of Rs.15,00,000/- was received towards administrative cost, which is continuously being shown every year/successive year as opening and closing balance reflects that the amount was to be received only after ....
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....g to Rs.2,67,58,055/- cannot be taxed as per Board Circular No. 151/2/2012-ST dated 10.02.2012, being prior to 01.07.2010, (ii) amount considered towards cancellation of cheque and flat cancellation amounting to Rs.35,93,727/- cannot be considered as taxable and (iii) amount towards sale of investment property amounting to Rs.1,06,11,600/- cannot be subjected to levy of Service Tax. In support of their contentions, the appellant has also enclosed copies of the CA certificate(s), sample ledgers, etc. 3.7. It is submitted by the appellant that the demand of Service Tax on 'builder's special service' is not under challenge, which stands paid by them and appropriated by the ld. adjudicating authority, as seen from paragraph 4.10.1. of the impugned order, they are challenging the demand of interest in this regard. The appellant thus prays for waiving the demand of interest on this count. 3.8. Regarding the demand for reversal of alleged inadmissible CENVAT credit, the appellant submits that they have rightly availed and utilized CENVAT Credit towards the service of Renting of Immovable Property Service and Maintenance and Repair Service, but in the impugned adjudication order the ....
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.... of interest for delayed payment of service tax for the period prior to the effective date of such amendment deserves to be quashed and / or set aside." 6.1.1.Having gone through the said contentions on interest, we do not find any justifiable reason to agree with the same. Accordingly, we hold that interest has been rightly paid by the appellant in this regard. However, considering the prayer made by the appellant, the excess payment made by the appellant against such interest liability is allowed to be adjusted against other interest liabilities, if any, arising out of this order. 7. Regarding the demand of Service Tax under the category of 'management, maintenance and repair service', it is seen that the amount received under this category is nothing but reimbursement of expenses from the tenants towards the repairs and maintenance charges on actual basis, for the works carried out on the rented property. Thus, we hold that no service tax is leviable on this amount since, the reimbursements have been made on actual basis. We find that this issue already been decided by the Hon'ble Delhi High Court in the case of M/s Intercontinental Consultants and Technocrats Pvt Ltd vs U....
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....e House has the power to modify the rule..." (Emphasis supplied) The above judgement was appealed before the Hon'ble Supreme Court of India, and the same has thereafter been affirmed, as reported in 2018 (10) G.S.T.L. 401 (S.C.) 7.1. In view of the above, we hold that the demand of Service Tax confirmed under the above category, on reimbursements of expenses, is not sustainable. Accordingly, the same is set aside. Regarding the aspect of leviability of interest on this score, as the demand itself does not survive, the question of demanding interest does not arise at all. 8. Regarding the demand of service tax under the category of Maintenance Deposits on the advances received from service recipients during the period 2008-09 to 2009-10 & 2011-12, we observe that such maintenance deposit taken from the intending purchaser/buyer is nothing but advance deposit towards Sinking Fund/Development Fund, which is ultimately handed over to the association/society, once the building is handed over to the association/society. The said fund is utilized for any unforeseen expenses, which might be borne by the society at a later point of time, owing to aging of the building. Acc....
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....orically held that such reimbursable charges are not includible in total taxable value and that the demand of service tax cannot sustain. The relevant part of the said decision is reproduced below: "5. The issue is whether the electricity charges and air conditioning charges collected by the appellant on actual basis from the tenants is includible in the taxable value for discharging service tax under renting of immovable property. It is brought out from records that electricity charges and air conditioning charges are nothing but actual charges which are being reimbursed by the tenants. The decision of the Hon'ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. (supra) has held that such reimbursable charges cannot be included in the taxable value for the purpose of discharging service tax. This Tribunal in the appellant's own case vide Final Order (supra) has held that such reimbursable charges are not includible in total taxable value and that the demand of service tax cannot sustain. Following the same, we are of the view that the demand requires to be set aside, which we hereby do. The impugned order is set aside." 9.1. Thus, by rel....
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....ear 2011-12. They have also submitted a Chartered Accountant's certificate dated 19.06.2025 to this effect, indicating that the net taxable advances for the Financial Year 2011-12 should be computed on the basis of the difference between the closing balance as on 31st March, 2012 and the opening balance as on 1st April, 2011. The submission made by the appellant in this regard is as under: - "The Appellant humbly submits that in order to calculate service tax liability for the period FY 2011-12, the Learned Adjudicating Authority has taken into consideration the opening balance of Rs. 22,45,17,643.00 which ought to have been excluded from the total consideration. Such figure of Rs. 22,45,17,643.00 was already part of the FY 2010-11 and could not have been assessed again in FY 2011-12." 11.1.1. We agree with the above submission made by the appellant on the basis of the Chartered Accountant's certificate issued. Thus, we are of the view that the net tax payable on the Advances is to be arrived at on the basis of the difference between the closing balance as on 31st March, 2012 and the opening balance as on 1st April, 2011 only, as per the Chartered Accountant's certifica....
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....Rs.3,593,727 (Rupees Thirty-Five Lakh Ninety-Three Thousand Seven Hundred Twenty-Seven only) is reflected in the books relates to cancellation of cheques and credit note issued on account of cancellation of flat which should not form part of Advances against flat.". As there is no service rendered in connection with the said amount received, on account of cancellation of cheque/flat, we hold that the said amount is not includable for the purpose of computation of their Service Tax liability in this regard. Hence, we set aside the demand of Service Tax confirmed on this count. 11.2.2. We also take note of the appellant's claim that the lower authority has considered the amount pertaining to sale of investment property of Rs.1,06,11,600/- for arriving at the net taxable amount in this regard. We find from the records that the appellant, in the capacity of an investor, has effected sale of the said investment property. It has been pointed out by the appellant that as per Explanation to Section 65(105)(zzzh) of the Finance Act, 1994, construction of a complect which is intended for sale by a builder or any person authorized by a builder shall be leviable to service tax, whereas, in ....