2018 (3) TMI 268 – CESTAT CHENNAI – TMI – Valuation – inclusion of reimbursement of expenses – electricity charges – air-conditioning charges – Held that: – demand in respect of electricity charges and air-conditioning charges being reimbursable expenses, we are of the view that these cannot be included in the total value of taxable services.
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As per lease deed, the respondent is under obligation to maintain common areas and provide various amenities. The amount collected as operation and maintenance charges represents charges for maintenance of the building rented out to the clients – Though, the respondent has included such charges under Renting of Immovable Property Service and is discharging service tax under such category after 1.6.2007, the issue whether they were providing any maintenance services prior to 1.6.2007 and whether these will fall under MMR services has to be looked into – the matter requires reconsideration on this aspect.
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Appeal allowed by way of remand
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demand of ₹ 25,31,822/- being the service tax for the period June 2005 to January 2008 along with interest and imposed equal penalty under Section 78 with option to pay reduced penalty under proviso to the said Section. In appeal, Commissioner (Appeals) set aside the demand, interest and penalty. Hence, department is now in appeal before the Tribunal. 2. On behalf of the department, ld. AR Shri R. Subramanian submitted that the respondents had not discharged service tax on the electricity charges and air-conditioning charges while paying service tax under the category of renting of immovable property service. So also they have collected maintenance charges and are liable to pay service tax from 16.6.2005 to 31.5.2007 when such services have become taxable. As per the lease deed and records, the respondents (lessor) has an obligation to maintain common areas and provide certain amenities, facilities and services in discharge of its obligation to the tenants namely Biotech Researc
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as raised the demand on three sets of charges. ₹ 14,53,834/- has been confirmed on operation and maintenance charges for the period 16.6.2005 to 31.5.2007; an amount of ₹ 2,67,789/- has been confirmed being the electricity charges collected and paid by the respondents. Further, an amount of ₹ 8,10,199/- has been demanded being air-condition charges collected and paid by the respondents for the period June 2007 to January 2008. She submitted that the electricity charges and air-conditioning charges are nothing actual charges which are being reimbursed by the tenants. That the levy of service tax on these amounts has been rightly set aside by the Commissioner (Appeals). In respect of operation and maintenance charges, ld. counsel submitted that the respondent has paid service tax under the category of Renting of Immovable Property Service when such services have become taxable.. The respondent has been discharging service tax on the operation and maintenance fees collec
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de the entire demand. The demand in respect of electricity charges and air-conditioning charges being reimbursable expenses, we are of the view that these cannot be included in the total value of taxable services. For this we take sustenance from the decision of the Tribunal vide Final Order No. 41806 & 41807/2017 dated 28.8.2017 in the case of M/s. Plaza Maintenance and Services Ltd. This issue is found against the Revenue, and we uphold the order passed by Commissioner (Appeals) on setting aside demand on electricity charges and air-conditioning charges. 6. On perusal of records, as per lease deed, the respondent is under obligation to maintain common areas and provide various amenities. The amount collected as operation and maintenance charges represents charges for maintenance of the building rented out to the clients. The defense put forward by the ld. counsel for respondent is that these charges are integral part of the rent. Though, the respondent has included such charges u
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