TMI Blog2018 (11) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... C REALITY (INDIA) PVT LTD OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE [2013 (12) TMI 854 - CESTAT MUMBAI] relied upon where it was held that Electricity charges collected from the tenants cannot be formed part of the assessable value for the purpose of service tax as provider of renting of immovable properties. Appeal allowed - decided in favor of appellant. - Appeal No. ST/11184/2018-DB - A/12622/2018 - Dated:- 26-11-2018 - MR. RAMESH NAIR, MEMBER (JUDICIAL) And MR. RAJU, MEMBER (TECHNICAL) For Appellant: Shri. Bharat Raichandani (Advocate) For Respondent: Ms. Nitina Nagori(A.R.) ORDER Per: Ramesh Nair Brief facts of the case are that the appellant is engaged in providing taxable service under the category of renting or immovable property service , for which they have obtained service tax registration and discharge the service tax on such services. During the course of EA- 2000 Audit it was noticed that the appellant have recovered reimbursement charges of ₹ 6,44,88,765/- from their client (tenants) towards electricity charges in addition to the rent amount. The case of the department is that the said reimbursement charges towards ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the reimbursement of the same will not form part and parcel of gross value of service of renting of immovable property.This issue is no longer res-Integra as the same has been decided time and again in the following decisions:- ICC Realty (India) Pvt. Ltd Vs CCE., Pune- 2013 (32) S.T.R 427 (Tri-Mumbai) 9. We have gone through the Lease Agreements. As per the terms and conditions of the Lease Agreements, the tenants have to pay electricity charges directly to the MSEB and the appellants are also providing electricity through generator set in case there is a power failure and the appellants are charging for the same. We find that electricity is specifically covered under Tariff Heading 27 of the Central Excise Tariff Act. We find that as per the provisions of Maharashtra Value Added Tax Act, 2002, electricity is also covered under Schedule A Sr. No. 20 and charged to Nil rate of tax. In view of this, we find the electricity is goods chargeable to duty under Central Excise Tariff as well as under the Maharashtra Value Added Tax Act, 2002. Therefore, the supply of electricity to tenant amounts to sale of goods and not supply of service. Further the Notification No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be seen that electricity and water services are being provided by other Government agencies ST/50156/2015 6 and the charges for use of the said facilities is being raised on the service provider i.e. the appellant on actual basis which the appellant is collecting from the Shan-e-Bhopal Restaurant‟ and same is deposited with the authorities providing electricity and water. In view of these facts, it can be concluded that the appellant is purely working as an agent in collecting the charges with regard to supply of water and electricity and deposited the same with authorities concerned. The provisions of Rule 5(2) of Service Tax (Determination of Value) Rules provides that wherever the expenditure cost incurred or received by the service provider as a pure agent, same shall be excluded from the taxable value of the service. As all the conditions provided in Rule 5(2) of Service Tax Valuation Rules, 2006 are satisfied, we are of the opinion that appellant has behaved purely as and agent and the charges of electricity and water cannot be included in the taxable value of the services, namely support service of business provided by the appellant. In view of the above, we hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectricity generated and supplied by the appellant to the tenants and covered by the agreement with the tenants will be liable to payment of service tax under the category of maintenance. (iv). In the case of ICC Reality India Ltd., the Tribunal had occasion to consider whether the reimbursement of electricity charges from tenants is to be included in the consideration for payment of service tax in the category of renting of immovable property. The observation of the Tribunal is reproduced below: 9. We have gone th 4 S.T. of 2013 that electricity is goods and chargeable to Nil excise duty. The decision of the adjudicating authority is accepted by the Revenue as per the communication dated 26-9-2012 by the Commissioner of Central Excise, Pune-III. The present appellants are also under the jurisdiction of Pune-III Commissionerate. (v). By following the above decision which has further also been followed in other cases, we conclude that there can be no levy of service tax on the electricity charges which are reimbursed to appellant by the tenants. However, on a perusal of the agreement entered into by the appellant with the tenants, we note that the tenant is also liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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