TMI Blog2023 (9) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... in the SCNs or impugned orders, which states that they have been collecting anything over and above the amount incurred towards payment of electricity bill and water bill or diesel consumption or that there was any profit involved therein - The fact that the reimbursable expenses, have been specifically brought under the coverage of gross value w.e.f. 14.05.2015, further supports the Appellant s argument that the amounts collected on reimbursable basis were not liable for inclusion before that. In fact they have stated that in their own case itself for the subsequent period, Commissioner (Appeals) has also set aside the demand for the period 01.10.2014 to 14.05.2015 on diesel charges . Thus, the demand on these three charges viz., electricity, water and diesel cannot sustain - for parking charges, the amount collected also needs to be included in the gross value in Management, Maintenance or Repair services - appeal allowed in part. - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND MR. A.K. JYOTISHI, MEMBER (TECHNICAL) Shri K. Vijay Kumar, Advocate for the Appellant. Shri V.R. Pavan Kumar, AR for the Respondent. ORDER The Appellants are providing the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent verified sample Agreements to come to the conclusion that the Appellants are collecting reimbursable expenditure incurred towards water, electricity, diesel and also parking charges. 3. In order to understand the exact scope of this reimbursement charges being collected by the Appellant, the relevant paras of SCN are reproduced below. i) Section 5: Reimbursement of Electricity charges: LTIL shall provide independent energy meters for lighting, UPS and AHU Power loads for each module. LTIL shall provide a separate common meter for the chillers, the consumption of which will be apportioned to various modules based on the AHU meter consumption of each module. The electricity consumption for common area lighting, elevators, pumps, etc., shall be apportioned pro rata to the space occupied by the Occupant. LTIL will submit invoices to the Occupant by the 25th of each month and Occupant shall reimburse the amounts paid by the LTIL towards electricity charges on or before 10th of succeeding month. ii) Section 6: Reimbursement of Water and Diesel consumption charges: 6.1 . In the event LTIL arranges for additional water supply due to any scarcity in the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts as reimbursable expenditure and also certain amount as parking charges, but they failed to include in the value of taxable services and therefore, they have failed to pay service tax. 5. Essentially the Department is relying on Rule 5(1) of Service Tax Valuation Rules, 2006 to bring certain reimbursable expenses within the ambit of gross value. The Adjudicating Authority while considering various aspects in relation to this SCN, inter alia, came to the conclusion that the impugned reimbursable expenses collected from tenants at actual, are akin to the CMC charges collected, at actual from the customers and all these charges are necessary for maintenance of building. Without maintenance no tenant would come forward to occupy the premises. Since the reimbursable nature of these charges has been clearly spelt out in the Agreements, they are liable to pay service tax on these amounts. He has relied on the provisions of Rule 5(1) of Service Tax Valuation Rules, 2006, as also on the judgment of the Tribunal in the case of Pioneer Services vs CST, Chennai [2012 (27) STR 285 (Tri- Chennai)] wherein, it was held that CMC charges which are charged separately from the customer on actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of water, electricity and diesel charges. The learned Advocate also points out that the Adjudicating Authority has already dropped the demand on electricity and water charges in their own case for the subsequent period, and that the same appears to have been accepted by the Department, as no Appeal has been filed against the same. They have also submitted that Commissioner (Appeals) has set aside the demand on diesel charges also for the period 01.10.2014 to 14.05.2015. 9. They have mainly relied, apart from various Tribunal judgments, on Hon ble Supreme Court judgment in the case of Inter Continental Consultants Technocrats Ltd [2012-TIOL-966-HC-DEL-ST], wherein upholding the decision of the Hon ble Delhi High Court, inter alia, the Hon ble Supreme Court held that only with effect from 14.05.2015, such reimbursable expenditure and costs also form part of valuation of taxable services for charging service tax. In the Order of Hon ble Delhi High Court, Rule 5(1) of the Service Tax Valuation Rules, 2006 was struck down, and later on Hon ble High Court was upheld by Hon ble Supreme Court. Therefore, the Department cannot place reliance on Rule 5(1) for including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellants were recovering certain amount towards electricity, water and diesel on reimbursement basis, though in respect of parking charges no such grounds have been raised. Therefore, in so far as the amount collected in the nature of reimbursement is concerned, with respect to electricity, water and diesel consumption, they are not in dispute. The Original Authority in this case has relied heavily on Rule 5(1) to include these charges in the gross value of taxable services. Even in respect of parking charges, he has relied on Rule 5(1) despite it not being in the nature of reimbursement expenses. The Adjudicating Authority has already considered the reimbursement charges collected in respect of electricity and water as not includible in the assessable value. Whereas, he found the amount collected towards diesel consumption and parking charges as includible in the value and therefore, confirmed the demand to that extent. He has mainly relied on the clarification issued by CBEC vide Letter F.No.B1/4/2006-TRU dated 19.04.2006, wherein, the CBEC has explained the nature of reimbursable expenditure. However, in cases where the service provider acts as a pure agent or not, in a give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices, being provided by the Appellants. Relying on this service, the parking charges were considered as liable to service tax under the category of Management, Maintenance or Repair service. It is also not disputed that he has not collected the parking charges on reimbursable basis. There is nothing on record to indicate anything to the contrary. Therefore, the argument that no service tax is payable is not sustainable. The Appellants were required to provide parking space and it s clearly part of maintenance service. Hence the amount collected also needs to be included in the gross value. The case cited is clearly distinguishable on the facts of the case, hence will not help the Appellants and therefore, no need to interfere with the OIO to this extent. Accordingly, the following order is passed. 16. The OIO is set aside to the extent of water, electricity and diesel charges and the Appeal is partially allowed. So far the demand of tax on parking charges is concerned, the same is confirmed. In the facts, all the penalties are set aside. Appellant shall be entitled to consequential benefits. 17. Appeal allowed in part. (Pronounced in the Open Court on 27.09.2023) - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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