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TMI Blog2018 (10) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... g projects of M/s Ajnaaraa India Ltd., and these agreements were signed separately for different projects. They had also entered into agreement with individual residents for provisions of the service of maintenance. The service agreements revealed that they had also collected Interest Free Maintenance Security deposit (IFMS) from the residents. This deposit was being received from the residents being charged in order to guarantee the due payment of maintenance charges and/or other amounts agreed upon in the agreement and it was non-refundable and only transferrable to third person (s), in the present case being the RWA. Further, as per agreement, the appellants were entitled to adjust arrears of any resident for maintenance, water, electricity, water, power back-up and other charges from the said IFMS. 3. From the above, it appeared that during the period 2009-10 to 2013-14 the appellants had not paid service tax on IFMS and thus had failed to correctly assess their Service Tax liability as per provisions of Section 67 of Finance Act, 1994 in as much as they had not assessed their Service Tax liability on the entire value of taxable services provided or to be provided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the invoice raised for maintenance services. Whenever adjustment of pending charges was made in the books with IFMS balance, the appellants considered the maintenance charges as received from such defaulter user and the due amount of service tax on such adjusted amount was being paid always. Therefore, security amount is not taken for provision of any service and hence not taxable. (iii) In continuation, if there is no nexus between the amounts received by the service provider with that of the provision of service, then such amount would not constitute as consideration for the purpose of charging service tax on it. Applying the same principles in the instant case of the appellants, there is no nexus of the provision of maintenance service by the appellants with that of the IFMS received in the advance as security. (iv) In order to levy tax on the disputed amount, the fact that the consideration i.e. monthly maintenance charges and annual maintenance charges have been influenced by the IFMS, should be established and the onus of this lies only on the department. It is a trade practice of depositing the security in the name of IFMS with the builder or the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, being in the nature of advances against services to be provided, the same was to be chargeable to Service Tax. The adjudicating authority thus held the entire amount of security deposit as charges for maintenance service and hence liable to service tax. 9. The appellants have on the other hand, contended that, security amount had been taken to ensure timely payment of these charges and in case any amount was not paid or default was made by the occupant, then such due amount was adjusted from said security amount. The appellants have paid services tax on the invoice raised for maintenance services. There was no nexus between the amounts received by the service provider with that of the provision of service, then such amount would not constitute as consideration for the purpose of charging service tax on it. Therefore, security amount was not taken for provision of any service and hence not taxable. 10. It is seen that, the appellants were separately charging Annual Maintenance Charges for the first 18 months and after that monthly maintenance charges from the flat owners and service tax was being duly paid in the government exchequer on these two charges receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed Explanation.-For the purposes of this section,- (a) "consideration" includes- (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the provisions of sub-section (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. [Civil Appeal No. 2013 of 2014] decided on MARCH 07, 2018. Further, the appellants had retained this amount till the stage of transfer of maintenance responsibility to RWA. The repair and maintenance was the responsibility of developer till that stage. The issue of taxability of maintenance charges in such cases was decided by Honourable Tribunal in the case of Kumar Behary Rathi vs. CCE Pune [2014(34)STR 139 (Tri-Mumbai). Subsequently, the Hon'ble Bombay High Court in the case of 2018-TIOL-288-HC-MUM-ST, Commissioner of Service Tax vs. Shree Krishna Chaitanya Enterprises, Green Valley Developers, Kumar Beheray Rathi upheld the decision of the Hon'ble CESTAT in all these cases. It was held that, "Service-tax on maintenance of property: , the builder/ developer is under a statutory obligation to look after the day-to-day upkeep, maintenance and repair of the property till conveyance to the co-op society. Such maintenance of the structure is not rendering a taxable s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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