TMI Blog2018 (12) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ty deposit was with the appellant and subsequently even when security deposit was refunded and even when the entry of taxable service was yet to be entered into the Statute - thus the security deposit did not influence monthly rental. Tribunal in the case of K. Raheja Corporation Pvt. Ltd. [2015 (2) TMI 886 - CESTAT MUMBAI] has held that notional interest on security deposit cannot be added to rent agreed upon between the parties for the purpose of levy of service tax for renting of immovable property. There was no reason to add notional interest in the monthly rent for the purpose of assessment of service tax - appeal allowed - decided in favor of appellant. - APPEAL No. ST/59364/2013-CU[DB] - FINAL ORDER NO 72654/2018 - Dated:- 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was 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% per annum upon the amount of security deposit. The notice finalized in the impugned order in confirming the method of loading of notional interest on security deposit. The demand of service tax raised as per the impugned order is ₹ 1,32,24,464/- with equal amount of penalty besides imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egime. That Section 67 of the Finance Act, 1994 does not speak about adding of notional interest. 4. The learned counsel for the appellant has further relied on the finding of this Tribunal in the case of K. Raheja Corporation Pvt. Ltd. vs. CCE, Pune-III reported at 2015 (2) TMI 886 CESTAT Mumbai. He has submitted that in the said case this Tribunal has relied on the decision of Tribunal in the case of Magarpatta Township Developers and Construction Company Ltd. and on relying on the decision in the said case of Magarpatta Township Developers and Construction Company Ltd. this Tribunal in the case of K. Raheja has held that Notional Interest on Security Deposit cannot be added to rent agreed upon between the parties for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d M/s Granada Services Pvt. Ltd. was entered into in the month of November, 2004 much before the activity was covered by levy of service tax, therefore, it cannot be held that to evade service tax the parties have entered into an agreement to have low rent and high security deposit. Further we note that the rend was ₹ 5,000/- per month right from the beginning of the agreement in the month of November, 2005 and it continued the same during the period of the present proceedings i.e., upto 31.03.2012 even after security deposit of ₹ 20 crores was refunded on 31.03.2011. We note that whether security deposit was with appellant or not the rent remained the same which was ₹ 5,000/- per month during the period when security depo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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