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Maharashtra State Co-Op. Bank Ltd. Versus Commissioner of Central Excise, Kolhapur

2017 (9) TMI 298 - CESTAT MUMBAI

Renting of immovable property Service - rent received from the lessee - repair and maintenance expenditure incurred by the lessee for the repair and maintenance of leased premises - Held that: - As regards the demand on service tax on repair and maintenance expenditure, we find that this amount is not towards lease rent - the said expenditure cannot be considered as extra consideration towards the lease rent. Lease rent is the only amount which is received by the appellant on account of lease of .....

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here is no provision in the Finance Act, 1994 for granting any exemption in respect of receipt of service charges, which is towards the recovery of outstanding loan. Therefore, the arrangements of lease is squarely covered under the services of renting of immovable property - demand upheld. - Appeal allowed - decided partly in favor of appellant. - ST/85191 & 85192/13 - A/89374-89375/17/STB - Dated:- 31-8-2017 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) Shri.Rajiv W .....

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iture, fixture, machinery, equipments, installations by way of mortgage and charge. The borrower has committed defaults in repayment of the credit facilities and accounts have been declared as non-performing by the appellant. After due process under SERFAESI Act, 2002 took over the actual and physical exclusive possession of the immovable property along with plant and machinery. In order to recover balance dues the appellant have decided to lease out seized property for the lease rent. Against t .....

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earned Counsel appearing on behalf of the appellant submits that the rent received from the lessee is for recovery of dues from the borrower and this is permissible under the SERFAESI Act, 2002. Therefore, the same cannot be treated as service charges and accordingly they will not be liable to service tax. He further submits that the service tax was also demanded on the amount of repair and maintenance incurred by the lessee on the ground that the repair and maintenance was obligation of the app .....

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he decision in the case of Raje Vijaysingh Dafale SSK Ltd - 2015 (38) STR 1056 (Tri-Mum). 2.1 He further submits that two properties were leased out. One property belong to M/s.Raje Vijay Singh Dafale Sahakari Sakhar Karkhana Ltd. and another property belonged to Tasgaon Palus Taluka SSK Ltd. and as far as the rent paid by Ganapati to the appellant in respect of property of Tasgaon Palus Taluka SSK Ltd. the service tax was in fact paid by the Ganapati in the name of Tasgaon Palus Taluka SSK Ltd. .....

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e judgement in the case of Sujana Metal Products - 2016 (342( ELT A115 and Persistent System Ltd. - 2016 (45) STR 177 (Tri-Mum). He also submits that as regards the demand related to M/s.Raje Vijay Singh Dafale Sahakari Sakhar Karkhana Ltd. cum tax demand works out to ₹ 2,13,770/-. He also submits that since the issue involving interpretation of statutory provision, penalty under Section 76, 77 & 78 of the Finance Act, 1994 has to be set aside as held in the case of Oracle India Pvt. L .....

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t avoid the taxability on the service. The reference made to SERFAESI Act, 2002 is a mechanism for recovery of the outstanding dues, which will not affect the service tax liability on the service of renting of immovable property. Therefore, only because the appellants have received the rent as on account of recovery of outstanding, the service tax cannot be avoided. 4. We have carefully considered the submissions made by both sides. We find that the demand of service tax is on two counts. One is .....

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xpenditure cannot be considered as extra consideration towards the lease rent. Lease rent is the only amount which is received by the appellant on account of lease of the premises to the lessee. Therefore, the demand on expenditure towards repair and maintenance is not sustainable. Accordingly, we set aside the demand related thereto. 4.1 On the second count the demand is as lease rent the submission of the appellant is that since the lease rent towards the recovery of outstanding dues, the same .....

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