2018 (5) TMI 1673 - AT - Service Tax

Valuation - Maintenance or Repair Service - electricity received from the Grid - inclusion of charges recovered for the electricity generated by the appellant using generators and supplied to the tenants - Held that - There can be no levy of service tax on the electricity charges which are reimbursed to appellant by the tenants - However, we are unable to come to the conclusion regarding the amount of electricity generated by the appellant and supplied to the tenants by using thereown generating sets. The payment for which is includible in the maintenance charges. Valuation - interest free maintenance advance and security deposit - whether adjustment of interest free maintenance advance and security deposit towards maintenance charges on month to month basis has been done or not? - demand of service tax - Held that - In respect of interest free maintenance advance, the appellant has admitted the liability for payment of service tax from the date such advance has been received. Such liability has also been paid with interest and we uphold the same. In respect of security deposit, the amounts cannot be included in the consideration as long as the same remains interest free advance to be returned to tenant at a subsequent date - the appellant directed to submit details to the adjudicating authority, duly certified by the Chartered Accountant, to the effect whether security deposit also stands adjusted towards maintenance charges during the disputed period - matter on remand. CENVAT credit - service tax paid on the various services claimed as input services - services procured by the appellant from sub-contractors - Held that - If the sub-contractor services relate only to maintenance service, the restriction imposed by Rule 6(3) will not be applicable to the appellant - matter remanded to the adjudicating authority who will examine the claim of the appellant and pass denovo decision in this regard. Period of limitation - The adjudicating authority also to consider the plea of extended period. Appeal disposed off.

Summary

Issues:
1. Liability of service tax on electricity charges recovered from tenants.
2. Treatment of interest-free maintenance advance and security deposit for service tax.
3. Availing of cenvat credit on input services for maintenance and renting of immovable property services.

Analysis:

Issue 1:
The dispute in this case revolves around the liability of service tax on electricity charges collected by the appellant from tenants. The Revenue contended that charges for electricity generated by the appellant using generators and supplied to tenants should be included in maintenance charges subject to service tax. The appellant argued that only charges recovered from tenants and paid to the Electricity Board are liable for service tax, citing relevant case law. The Tribunal analyzed the agreements and directed the appellant to provide details of electricity generated and supplied to tenants for inclusion in maintenance charges, subject to service tax.

Issue 2:
Regarding the interest-free maintenance advance and security deposit collected from tenants, the Adjudicating Authority raised a demand for service tax on these amounts. The appellant maintained that the interest-free maintenance advance was adjusted towards charges and service tax was paid accordingly. However, the liability for service tax was disputed from the date of receipt of the advance. The Tribunal upheld the payment of service tax on the advance but ruled that security deposits, unless adjusted towards charges, cannot be considered as part of the consideration for service tax.

Issue 3:
The appellant availed cenvat credit on input services, including those from sub-contractors, for maintenance and renting of immovable property services. The Revenue restricted the credit to 20% due to the inclusion of Renting of Immovable Property Service from 01.07.2007. The appellant argued that the restriction was unjustified as the input services were solely for maintenance. The Tribunal remanded the matter to the adjudicating authority for further examination based on the Chartered Accountant's certificate. Additionally, the plea of limitation beyond the five-year period was directed to be considered by the adjudicating authority.

In conclusion, the Tribunal disposed of the appeals by addressing the issues of service tax on electricity charges, treatment of advance and security deposit, and availing of cenvat credit, providing detailed analysis and directions for further proceedings where necessary.