TaxTMI 
TaxTMI 
2025 (11) TMI 1199
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....viz., 'Construction of Complex Service' and 'Works Contract Service' during the relevant period. The appellant had collected maintenance deposit charges from purchasers of the flats in the constructed apartments in accordance with the Construction Agreement entered with individual flat owners. They have been paying service tax on maintenance service rendered by them on certain portion of the expenses which were charged/recovered by means of adjustment from the notional interest calculated on the corpus of the maintenance deposit collected from the flat owners but not discharged service tax, which were also charged/recovered by means of adjustment from the notional interest calculated on the corpus of maintenance deposit. Alleging that the a....
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....hat maintenance deposits collected in discharge of statutory obligations are not taxable consideration. • Kumar Beheray Rathi v. CCE (2014 (34) STR 139 Tri-Mum) • Sobha Developers v. CCE (2025-VIL-1183 CESTAT-BLR-ST) • Shri Krishna Chaitanya Enterprises (2018 (14) GSTL 533 Bom HC) • Adarsh Developers (2018 (8) TMI 1009) • Purvankara Projects (2019 (11) TMI 679) • Ballal Developers (2019 (9) TMI 889) 2.1 The learned counsel further contends that the demand on notional interest is baseless, as Section 67 of the Finance Act, 1994 taxes only the gross amount charged for services actually rendered. He submits that notional or assumed interest on deposits is neither ....
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....posing penalty under Sections 78 is unwarranted. 3. The learned Authorised Representative (AR) for the Revenue contends that the developer provides taxable service under the category "Management, Maintenance or Repair Service" under Section 65(105)(zzg). He submits that appellant earned substantial notional interest on the maintenance deposits and paid service tax on certain maintenance expenses and did not discharge service tax on large portion of expenses, citing that pure agent treatment, trustee status and statutory obligation under the Karnataka Ownership Flats Act, 1972 (KOFA). Statutory obligation under KOFA does not override the charging mechanism of the Finance Act, 1994. This position overlooks the fundamental principles that s....
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....on is that expenses like housekeeping salary, Electrician and Plumber's salary, STP and WTP Operator's salary and Landscaping charges which are incurred in connection with repair and maintenance of the constructed flats in the complex by the appellant adjusted against the notional interest of maintenance deposit is liable to pay service tax though collected as "pure agent" being reimbursed to the appellant. We find that the learned Commissioner while confirming the demand observed that the said expenses form part of the value of repair and maintenance service as per Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 read with Section 67 of the Finance Act, 1994. We find that the demand is for the period from October 2006 to M....
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....truction of Residential Complex (Section 65)(105)(zzzh) of the Finance Act, 1994'. 4.2 As mentioned above, the charges collected in dispute referred above are electricity charges, water charges and legal fees. These are statutory charges to be collected by the appellant and to be paid to the respective authorities are in the nature of reimbursable expenses. The issue of inclusion of reimbursable charges in the taxable value is no longer res integra in view of the decision by the Supreme Court in the case of Union of India Versus Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) G.S.T.L. 401 (S.C.). The Hon'ble Supreme Court held as follows: "24. In this hue, the expression 'such' occurring in Section 67 of the Act....
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...., viz., the service tax is to be paid only on the services actually provided by the service provider. 26-28. ..... 29. In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with 'consideration' is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of ....