2018 (9) TMI 500 – CESTAT NEW DELHI – TMI – Valuation – appellant had received certain amounts towards electricity and water charges since 2008-2009 and on which no service tax has been paid – Rule 5(2) of Service Tax (Determination of Value) Rules – Held that:- It is a matter of record that appellants have been charging 20% of sales proceeds from “Shan-e-Bhopal Restaurant” as a commission for providing support service to business in the form of providing space for the restaurant and other infrastructure support which included the premises for housing restaurant, man power, security service, etc. It is also a matter of fact that electricity and water charges have also been recovered by the appellant from the restaurant owner on actual basis and same has been deposited with the respective authorities providing electricity and water to the said premises – appropriate Service tax is payable on 20% commission charged by the appellant from ‘Shan-e-Bhopal restaurant’ for providing the premi
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ppellant – the charges collected by them towards electricity and water, are not to be included in the taxable value for charging service tax.
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Appeal allowed. – Service Tax Appeal No. 50156 of 2015 – ST/A/52885/2018-CU[DB] – Dated:- 13-8-2018 – Mr. C L Mahar, Member (Technical) And Ms. Rachna Gupta, Member (Judicial) Shri Sandeep Mukherjee, CA for the Appellants Shri Sanjay Jain, AR for the Respondent ORDER Per: C L Mahar: The brief facts of the matter are that appellant has entered into a joint venture with Madhya Pradesh State Tourist Corporation and started a rail coach restaurant in the name of Shan-e- Bhopal . As per the terms and conditions of the agreement, the appellant is receiving 20% of sale proceeds in the form of commission for providing space and other infrastructural support such as electricity water manpower and security etc. to the Shan-e-Bhopal . During the audit by the department, it was detected that the appellant had received certain amounts towards electricit
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de his order dated 22.7.2014 has further confirmed the charges raised in the above mentioned order of Asstt. Commissioner. It has been contended by the learned advocate appearing on behalf of appellant that: (i) that the service tax amount chargeable on 20% commission charged by the appellant from the sale proceeds of Shan-e-Punjab restaurant the service tax under Business Support service has already been deposited by them from time to time. Wherever, there have been any delay, interest is also being paid by the appellant; (ii) that the charges collected by them towards electricity and water charges, same were on the actual basis and after collecting the electricity and water charges, same have been deposited by them with the respective authorities providing the services of water and electricity supply. It has further been added that so far as the demanding of service tax on water and electricity charges are concerned, the same is not within the provisions of service tax law as they ha
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sion of 5 years cannot be invoked in their case. 3. Learned advocate appearing on behalf of the appellant have also placed reliance on certain decisions of this Tribunal wherein it has been provided that the charges recovered by the service provider as an pure agent should not form the part of the taxable value of the services. (i) Shakeel Afjal Ladak vs. CCE, Mumbai I [2014 (34) STR 144 (Tri-Mum)]; (ii) Mandhana Exports vs. CCE, Kolhapur [2017 (49) STR 554 (Tri-Mum)]; and (iii) Mohan Enterprises vs. CCE, Visakhapatnam [2011 (21) STR 619 (Tri-Bang)] 4. We have also heard the learned DR and he has reiterated the findings of the impugned order in appeal of the Commissioner (Appeals). 5. We have heard both the sides and have also perused the record of the appeal. It is a matter of record that appellants have been charging 20% of sales proceeds from Shan-e-Bhopal Restaurant‟ as a commission for providing support service to business in the form of providing space for the restaurant an
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nment agencies 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 se
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