TMI Blog2022 (11) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the same, the impugned order is not sustainable - Appeal allowed. - SERVICE TAX Appeal No. 12087 of 2017, SERVICE TAX Appeal No. 12088 of 2017 and SERVICE TAX Appeal No. 10613 of 2018 - FINAL ORDER NO.A /11371-11373/2022 - Dated:- 14-11-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Sudhansu Bissa, Advocate for the Appellant Shri. G. Kirupanandan, Superintendent (Authorized Representative) for the Respondent ORDER The issue involved in the present case is that whether the appellant is liable to pay Service Tax on the deposit taken by the appellant from their customers as security deposit against towards trading of shares which is subsequently refunded without utilizing the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges. However, we find that the said Interest Free Deposit did not represent value of any taxable service. The said deposit amount was kept with the Appellant as security deposit to adjust the amount in case of any default in making payment by the client. The said deposit amount also refundable to client. We find that in the present matter Appellant also produced Certificate issued by the Chartered Accountant who certify that Appellant have not used the amount collected by them as Interest Free Security Deposit from client for any financial operations or for earning any interest and shown the said amount in Balance Sheet as Current Liability. The amount collected by the Appellant from the clients is in fact an interest free refundable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.), while deciding the appeal filed by the Department against the decision of the Tribunal, also explained the scope of Section 67 of the Act. The Supreme Court observed that any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. The observations are: The amount charged should be for for such service provided : Section 67 clearly indicates that the gross amount charged by the service provider has to be for the service provided. Therefore, it is not any amount charged which can become the basis of value on which service tax becomes payable but the amount charged has to be necessarily a consideration for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the department is that in addition to the service tax payable on rent, the liability for the tax also extends to the notional interest accuring on the lump sum deposit received by the Appellant from the lessee. We find that such a stand is not justified particularly in view of the decision of the Tribunal in the case of Murli Relators Pvt. Ltd. (supra) cited by the Appellant in their support. The Tribunal observed as follows: 6.3 In the case before us, there is not even an iota of evidence adduced by the Revenue to show that the security deposit taken has influenced the price i.e. the rent in any way. In the absence of such evidence, it is not possible to conclude that the notional interest on the security deposit would form part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and, therefore, what can be levied to Service Tax is only the rent charged and no notional interest on the security deposit taken can be levied to tax. There is no provision in Service Tax law for deeming notional interest on security deposit taken as a consideration for leasing of the immovable property. Therefore, in the absence of a specific provision in law, as held by the Hon ble Apex Court in the case of Moriroku UT India (P) Ltd. (supra), there is no scope for adding any notional interest to the value of taxable service rendered. Even in the excise law, under Rule 6 of the Valuation Rules, unless the department shows that the deposit taken has influenced the sale price, notional interest cannot be automatically included in the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f termination of the ownership agreement and if no such termination has taken place till date, the amount would not be refunded. As long as the provisions for refund of the said amount in the agreement itself is there, it has to be considered that the said amount is refundable and was towards security deposits and was not for the purpose of providing any services, so as to levy tax on the same. In view of the above judgments coupled with the facts that department could not bring on record any clinching evidence that the deposit has influenced the service charges, the demand is not sustainable. 05. Thus, for all the reasons stated above, it is not possible to sustain the impugned orders passed by the Commissioner (Appeals). Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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