TMI Blog2015 (8) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... revised or enhanced even if the agreement is renewed for extended periods. Further, there is a lock-in-period of 5 years whereby the appellant is assured to retain the deposit for a period of 5 years even in the event of the Lessee/ GSPL terminating the agreement prior to the expiry of 5 years. The judgments rendered in K. Raheja Corp. (P) Ltd. [2015 (2) TMI 886 - CESTAT MUMBAI] and Murli Realtors Pvt. [2014 (9) TMI 461 - CESTAT MUMBAI] where the Tribunal has held that notional interest on interest free security deposit cannot be added to the rent agreed between the parties for the purpose of levy of service tax on renting of immovable property, is not applicable to the present case. The facts of the instant case stands on a different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on monthly of rent of ₹ 5,000/- from the date on which such services became taxable. It is the case of Revenue that the rent payable per month fixed as per the agreement is not the sole consideration for the service of leasing/renting of immovable property. That the rent fixed has been influenced by the interest free security deposit taken by the appellant. That therefore the notional interest of the security deposit of 20 crores has to be added for proper valuation of the taxable service. Thus a show cause notice was issued proposing demand of service tax by fixing monthly rent @ ₹ 25,05,000/- per month by loading notional interest @ of 15% upon the amount of security deposit. The notice finalized in the impugned order in conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the services became taxable. The learned Counsel vehemently contended that loading of notional interest on interest free security deposit is without any basis and the application of notional interest is unknown to service tax regime. That Section 67 of the Finance Act, 1994 does not speak about adding of notional interest. 3. The Ld. DR on the other hand submitted that the rate of monthly rent fixed as per the agreement has been considerably depressed due to the interest free security deposit received by the appellant at the time of execution of the agreement. In such way, the appellants have obtained a huge capital which they would otherwise have to borrow from bank and pay interest thereon. The agreement also states about a lock-in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of rent, it is specifically stated that the rent shall not be revised or enhanced even if the agreement is renewed for extended periods. Further, there is a lock-in-period of 5 years whereby the appellant is assured to retain the deposit for a period of 5 years even in the event of the Lessee/ GSPL terminating the agreement prior to the expiry of 5 years. Considering all these, on the face of it, it has to be said that the security deposit of ₹ 20 crores received by the appellant is not in the nature intended for the purpose of securing default in rent, or utility charge or damages. It is something more. It was submitted on behalf of the appellants that the security deposit was later refunded and the proceedings for the period 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
