2024 (6) TMI 1040 - AT - Service Tax

Levy of Service tax - renting of immovable property - Common Area Maintenance Charges - Power Supply Charges - parking charges - Business Exhibition Service and Event Management Service - CENVAT Credit - submission of appellant not taken into account - violation of principles of natural justice - HELD THAT - Tthe impugned order has been issued without taking into account any submission made by the appellant. During the course of argument appellant have produced a chart showing the income from renting as detailed in their balance sheet under various categories and the service tax paid by them. There seems to be no liability towards service tax un-discharged except for the liability which is in respect of the two clients namely M/s Future Value Retail Ltd. and M/s Cinemax India Ltd - these clients were required to deposit 50% of the tax dues with the jurisdictional authority and had to give solvent surety in respect of the remaining amount. If the said requirement has been complied with then matter is covered in favour of the appellant and the demand made by impugned order to the extent of rent received from these clients could not have been confirmed in the impugned order. The case of the appellant was not considered on the basis of the documents and other evidences which were available at the time of investigation and adjudication even efforts has not been made to reconcile the figures of ST-3 returns with the balance sheet - The exercise which done shows that there may be some variation in the category of services against which service tax has been discharged and demanded in the show cause notice but it is not correct to say that the service tax has not been paid against the said services. Even Board have clarified that change in the classifiable services should not be lead another demand being made but the service tax paid under one category should have been adjusted against the taxable services under which it was due. As this impugned order has been passed without consideration of the documents which exists at the time of investigation and during adjudication just for the reason that appellant had not putting his case properly before the Original Adjudicating Authority the order is a non-speaking order requires to be set aside for this reason only and matter is remitted back to the Original Authority for reconsideration and de-novo adjudication. Appeal allowed by way of remand.

Issues Involved:

1. Demand of Service Tax on Renting of Immovable Property Services
2. Demand of Service Tax on Common Area Maintenance Charges
3. Demand of Service Tax on Power Supply Charges
4. Demand of Service Tax on Parking Charges
5. Demand of Service Tax on Business Exhibition Service and Event Management Service
6. Demand of Irregularly Availed Cenvat Credit
7. Imposition of Interest and Penalties

Issue-wise Detailed Analysis:

1. Demand of Service Tax on Renting of Immovable Property Services:

The Commissioner confirmed the demand of Service Tax amounting to Rs. 59,85,924/- on Renting of Immovable Property Services provided to M/s Future Value Retail Ltd. and M/s Cinemax India Ltd. The Commissioner noted that the retrospective amendment made the service taxable from 01-06-2007, and the Hon'ble Supreme Court's decision in the case of Retailers Association of India v. Union of India confirmed the taxability. The Commissioner observed that the appellants failed to provide adequate evidence to counter the allegations and thus confirmed the demand.

2. Demand of Service Tax on Common Area Maintenance Charges:

The Commissioner confirmed the demand of Service Tax amounting to Rs. 23,37,782/- on Common Area Maintenance Charges under Management, Maintenance, or Repair Services. The appellants failed to provide supporting documents or financial records to counter the department's calculations. The Commissioner held that the activities related to housekeeping, sanitation, and security of the commercial complex were appropriately covered under the Management, Maintenance, or Repair Service.

3. Demand of Service Tax on Power Supply Charges:

The Commissioner confirmed the demand of Service Tax amounting to Rs. 80,08,193/- on Power Supply Charges under Business Support Services. The appellants contended that these charges were for the sale of electricity, which is outside the purview of Service Tax. However, the Commissioner observed that the charges were collected on a lump-sum basis and not on actual consumption, and the appellants failed to provide evidence to prove otherwise.

4. Demand of Service Tax on Parking Charges:

The Commissioner confirmed the demand of Service Tax amounting to Rs. 2,32,642/- on Parking Charges. The appellants contended that Service Tax on parking was imposed from April 1, 2013, and they had already paid the tax from that date. However, the Commissioner noted that the appellants did not provide documentary evidence to support their claim and confirmed the demand.

5. Demand of Service Tax on Business Exhibition Service and Event Management Service:

The Commissioner confirmed the demand of Service Tax amounting to Rs. 24,102/- on Business Exhibition Service and Event Management Service. The appellants claimed that they had charged Service Tax under Renting of Immovable Property Services. However, the Commissioner observed that the services were appropriately classifiable under Business Exhibition Service and Event Management Service, and the appellants failed to provide evidence to counter the allegations.

6. Demand of Irregularly Availed Cenvat Credit:

The Commissioner confirmed the demand of Rs. 37,10,373/- for irregularly availed Cenvat Credit on services related to the construction of the building. The Commissioner referred to the CBEC Circular No. 96/7/2007-ST, which clarified that Cenvat Credit is not admissible on input services used in the construction of commercial buildings. The Commissioner held that the credit availed by the appellants was not allowable.

7. Imposition of Interest and Penalties:

The Commissioner confirmed the demand of interest on the Service Tax and Cenvat Credit amounts under Section 75 of the Finance Act, 1994, and Rule 14 of the Cenvat Credit Rules, 2004, respectively. Additionally, penalties were imposed under Sections 76, 77, and 78 of the Finance Act, 1994, and Rule 15 of the Cenvat Credit Rules, 2004. The Commissioner noted that the appellants failed to cooperate with the department and did not present themselves for personal hearings.

Conclusion:

The Tribunal found that the impugned order was passed without proper consideration of the documents and evidence available during the investigation and adjudication. The Tribunal observed that the appellants had paid the due Service Tax, as shown in their balance sheet and ST-3 returns, except for the liability in respect of M/s Future Value Retail Ltd. and M/s Cinemax India Ltd., which was covered by the Hon'ble Supreme Court's decision. The Tribunal set aside the impugned order and remanded the matter back to the Original Authority for reconsideration and de-novo adjudication, directing the authority to reconcile the figures in the balance sheet and ST-3 returns. The appeals were allowed by way of remand.

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