2012 (11) TMI 979 - AT - Service Tax

Waiver of pre-deposit - valuation - inclusion of electricity charges - Renting of Immovable Property Service - held that - Supply of Electricity is goods and the same shall not form part of taxable service as clarified by the Notification no. 12/2003 - applicant has made out a prima facie case for 100% waiver of the service tax confirmed and penalty imposed - Requirement of pre-deposit of the service tax, interest and penalty is waived and stay recovery thereof during the pendency of the appeal.

Summary

Issues:
Waiver of pre-deposit of service tax, interest, and penalty under section 78 of the Finance Act, 1994 in a case involving the supply of electricity to tenants along with renting of immovable property service.

Analysis:
The applicant sought a waiver of pre-deposit of service tax amounting to Rs.2,85,85,512/-, interest, and an equal penalty under section 78 of the Finance Act, 1994 related to 'Renting of Immovable Property Service'. The applicant, as the owner of premises rented to various individuals, paid service tax on the rent received and on maintenance activities without dispute. Additionally, the applicant supplied electricity to tenants through a common connection from MSEB, charging them based on meter readings. The Revenue contended that the electricity charges formed part of the 'Renting of Immovable Property Service', leading to a demand for service tax, interest, and penalty.

In a similar case involving Panchsheel Tech Park Pvt. Ltd., where the supply of electricity was considered exempted as per Notification no. 12/2003-ST, proceedings against the assessee were dropped. The applicant argued that electricity should be classified as 'goods' and hence exempt from taxable services as per the said notification. However, the adjudicating authority did not address this argument in the impugned order, prompting the applicant to seek a stay on the decision.

After reviewing the case of Panchsheel Tech Park Pvt. Ltd., the Tribunal acknowledged that electricity could be classified as 'goods' based on Notification no. 12/2003, exempting it from taxable services. Consequently, the Tribunal found that the applicant had established a prima facie case for a 100% waiver of the confirmed service tax and penalty. As a result, the Tribunal granted a waiver of the pre-deposit requirement for service tax, interest, and penalty, staying the recovery during the pendency of the appeal.