TMI Blog2018 (10) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 [2013 (12) TMI 269 - CESTAT MUMBAI], where it was held that Such maintenance of the structure is not rendering a taxable service as per s. 65 (64) of the Finance Act, 1994. Demand set aside - appeal allowed - decided in favor of appellant. - 63-ST/APPL-I/EAST/2018 - - - Dated:- 9-10-2018 - Mr. Gurdeep Singh, Commissioner, Appeals-I, Central Tax/GST, Delhi ORDER-IN-APPEAL BRIEF FACTS: This appeal has been filed by M/s Lotus Maintenance Services Pvt. Ltd., E-2/G-1, Dilshad Colony, Delhi - 110095 (hereinafter referred to as the appellants) against Order-In-Original No. 01/PA/ADC/GST/DE/2018-19 dated 23.04.2018 passed by the Additional Commissioner of CGST, East Commissionerate, New Delhi (hereinafter referred to as the adjudicating authority-AA). The AA vide the impugned order confirmed the demand of service tax amounting to ₹ 53,52,658/- under Section 73 of the Finance Act 1994 , ordered recovery of interest on the same under section 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce charges and amounts agreed upon in the agreement entered into with that user. This security amount is treated by the appellants as their liability by virtue of the fact that this amount needs to be paid/ transferred to the Resident Welfare Association after its formation by its members and this fact of transferability remains undisputed in the moot SCN dated 09-07-2014. The fact of treating this deposit as liability is also substantiated vide Balance Sheet where this amount has been disclosed under 'other Liabilities'. The amount is kept in a separate account dedicated for this purpose. The chargeability of tax is determined by the nature of service provided by the service provider and accordingly, service tax is to be levied on the amount of consideration charged by such provider for the provision of such service only. For the service provided, the appellants are separately charging Annual Maintenance Charges for the first 18 months and after that monthly maintenance charges are being charged by them and service tax is being duly paid in the government exchequer on these two charges Moreover, these payments of tax also remain undisputed in this concerned SCN. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected as a deposit from the flat owners of a housing society. 7. As recorded in the impugned order, Interest Free Maintenance Security (IFMS) was collected as security deposit in order to guarantee the due payment of maintenance charges and / or other amounts agreed to be paid as per the agreement. The IFMS was non - refundable and only transferable to a third person (s). In case the flat owner wanted to transfer the flat, the amount would get transferred to the account of new owner subject to adjustment of arrears of maintenance, water, electricity, power back up and other charges. Once the builder handed over the maintenance to RWA, this amount was transferred to RWA. No service tax was charged and paid in respect of IFMS. As and when any pending arrear of maintenance charges was adjusted from IFMS, service tax was paid on such adjusted amount. 8. The AA in the impugned order has held that the contention of the appellants that an amount which was 'non-refundable' to the person who was actually making the payments in lieu of receiving certain taxable services, if transferred to a third party, could be construed as refundable, appeared to be an attempt to justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gross amount chargeable to tax for provision of the said service in the impugned order is not tenable as only advances for the services and actual receipts for provision of the said service can be legible to tax which in this case being the advance deposit of first 18 months and the monthly charges are already covered by service tax and the same was duly paid. The deposit (IFMS) could not be correlated to payment or advance for service. Section 67 which the adjudicating authority has referred to include the security deposit under service charge, reads as under: SECTION 67. Valuation of taxable services for charging service tax. -(1) Subject to the provisions of this Chapter, service tax chargeable on any taxable service with reference to its value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the expression such occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing such taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such taxable service . That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 25. This position did not change even in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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