2013 (12) TMI 151 - AT - Service Tax

Demand of service tax - Collection of maintenance charges - Held that - adjudicating authority had already accepted that the applicant is eligible for the CENVAT credit against the confirmed demand. The learned counsel submits that the deductions claimed on electricity and water charges before the Commissioner was not considered by the Commissioner. We agree with the submission of the learned AR insofar as the eligibility of CENVAT credit was not verified by the jurisdictional authority. We direct the applicant to deposit 50% of the tax as demanded and CENVAT credit may be adjusted - Upon such deposit, predeposit of the balance dues stands waived and recovery thereof stayed during the pendency of the appeal - Partial stay granted.

Summary

Issues:
1. Confirmation of service tax demand for maintenance charges collected from tenants.
2. Eligibility for CENVAT credit and adjustment against the demand.
3. Predeposit requirement and stay of recovery during appeal.

Analysis:
1. The judgment deals with the confirmation of a service tax demand on maintenance charges collected from tenants by a business leasing commercial complexes. The Commissioner confirmed a demand of Rs.1,70,68,928 for the period April 2008 to January 2010, based on the collection of maintenance charges for managing, maintaining, and repairing the property. The applicant contested the demand on merit, arguing against the sustainability of the tax on electricity and water charges. The Tribunal acknowledged the eligibility for CENVAT credit against the demand.

2. The applicant claimed deductions for electricity and water charges, which were not considered by the Commissioner. The Tribunal directed the applicant to deposit 50% of the tax demanded, with the CENVAT credit to be adjusted subject to verification by the jurisdictional Superintendent. The Tribunal emphasized the need for compliance within eight weeks and set a deadline for reporting compliance. Upon the deposit, the predeposit of the remaining dues was waived, and recovery was stayed during the appeal process.

3. The judgment highlights the importance of verifying the eligibility for CENVAT credit and the need for compliance with predeposit requirements. It underscores the Tribunal's approach to balancing the interests of the parties involved while ensuring proper verification and adjustment of tax liabilities. The decision provides a framework for addressing similar issues in cases involving service tax demands and the adjustment of credits against such demands.