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2024 (4) TMI 330 - CESTAT NEW DELHIClassification of services - taxability - management, maintenance or repair services - renting of immovable property service - Supply of tangible goods service - Extended period of limitation - penalty. Management, maintenance or repair services - pipes laid down by the appellant for DJB for water supply and sewage - HELD THAT:- Laying of pipelines or part thereof or maintaining such pipelines clearly falls under the head “commercial or industrial construction service” provided the service recipient is a commercial organization or the service was rendered it for a commercial purpose. DJB is a statutory body of the Delhi Government with the mandate to supply water and maintain sewage lines. Clearly, these are not commercial activities nor is DJB a commercial entity. Therefore, the services rendered by the appellant to DJB cannot be charged to service tax. The impugned order has clearly erred in confirming the demand under management, maintenance or repair service. The demand of Rs. 1,28,72,584/- under this head needs to be set aside. Renting of immovable property service - HELD THAT:- It is found that renting of immovable property was chargeable to service tax under section 65 (105) (zzzz) during the relevant period except where such renting of property was for residential purposes. According to the appellant itself, it had rented its property to run a hostel and it had not rented it to somebody to stay. What is taxable under section 65 (105) (zzzz) is a service rendered by any person by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of business or commerce. Clearly, renting of the property for running a hostel is a commercial activity, therefore, the amount received for such renting was clearly exigible to service tax under section 65 (105) (zzzz). The demand of Rs. 8,33,522/-, therefore, needs to be upheld. Supply of tangible goods service - HELD THAT:- The appellant does not dispute that it received the hiring charges nor does it indicate what goods it had supplied and on what terms and to whom. All that the appellant is saying is that since the department is not able to establish that it had rendered “supply on tangible goods service” service tax cannot be fastened on it - When hiring charges were received by the appellant and the appellant neither disclosed what it had supplied nor the contracts to establish if the supply falls under the category of “supply of tangible goods service” or otherwise, it was fair on the part of the adjudicating authority to presume that the receipts on this count were for “supply of tangible goods” chargeable to service tax under section 65 (105) (zzzj). The demand on this count needs to be upheld. Extended period of limitation - Penalty - HELD THAT:- In this case, the information had to be gathered from various records and the service tax had to be assessed based on best judgment assessment. In respect of certain receipts, such as, the hiring charges, the appellant did not disclose as to what was given on hire by it and on what terms. The appellant cannot profit from its own actions and inactions by not disclosing the information. Similarly, the appellant did not disclose that it was renting of immovable property to be used as a hostel, which was clearly a commercial activity. Under these circumstances, it is found that the department was justified in invoking extended period of limitation of 5 years. For the same reason, the department is also correct in imposing the penalty under section 78. The appeal is partly allowed and the impugned order is modified to the extent of setting aside the demand of Rs. 1,28,72,584/- under the head “management, maintenance or repair service” along with interest on such amount and upholding the rest of the demand with interest. The amounts of penalty under section 78 also stands reduced proportionately.
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