2013 (12) TMI 794 - AT - Service Tax

Demand of service tax - Business Support Services - commercial complex (Mall) - given premises on licence and leave basis to various licencees - Management, Maintenance & Repair Services - Penalty u/s 76 & 78 - Service of providing furniture, fixtures, amenities, infrastructure in the unit for which amenities fee is charged - Held that - all the aforementioned charges are collected on per square feet basis on the area occupied or made available on lease-license basis to the licensee and the same are entitled to use of specified premises or unit in the mall and are recovered on monthly or periodical basis. Further, non-payment of any of the aforesaid charges would dis-entitle to use and occupy the premises - there is no question of any outsource service. Since the licensee of the appellant did not take any assistance or aid from the appellant, the appellant is not involved in any business process or part thereof of the licensee in any way - prima facie the charges collected by the appellant from its licensee are in the nature of rent as held by the Apex Court in the case of Karnnai (1956 (11) TMI 29 - SUPREME COURT). Thus, the appellant has made out a prima facie case for waiver of pre-deposit - Stay granted.

Summary

Issues:
1. Demand of Service Tax under 'Business Support Services' and 'Management, Maintenance & Repair Services' categories.
2. Imposition of interest and penalty under Sections 76 and 78 of the Finance Act, 1994.
3. Jurisdictional issues related to the issuance of show-cause notice and order.

Analysis:

Issue 1: Demand of Service Tax under 'Business Support Services' and 'Management, Maintenance & Repair Services' categories:
The appellant, a commercial complex operator, was demanded Service Tax for various charges collected from licensees. The charges included amenities/service charges, promotional & marketing charges, dish antenna charges, and business center charges. The Revenue alleged that these services fell under 'Business Support Services' and 'Management, Maintenance & Repair Services' categories. The appellant argued that the charges were part of the rental agreements and not separate taxable services. They contended that the charges were akin to rent and not covered under the specified services for taxation. The Tribunal agreed with the appellant, citing the Apex Court's ruling that such charges were in the nature of rent. Therefore, the Tribunal granted a total waiver of pre-deposit of tax and penalty, considering the charges as rent and not taxable services.

Issue 2: Imposition of interest and penalty under Sections 76 and 78 of the Finance Act, 1994:
The appellant was also penalized under Sections 76 and 78 of the Finance Act, 1994, for non-payment of Service Tax. The penalties were imposed based on the demand raised for the services provided. However, since the Tribunal considered the charges akin to rent and not taxable services, the penalties were waived off along with the tax demand during the pendency of the appeal. This decision was influenced by the nature of the charges collected and their resemblance to rent as per legal precedents.

Issue 3: Jurisdictional issues related to the issuance of show-cause notice and order:
The appellant raised jurisdictional concerns regarding the issuance of the show-cause notice by the Commissioner of Service Tax, Mumbai, and the subsequent order by the Commissioner (TAR), Mumbai. They argued that the order lacked jurisdiction due to the show-cause notice being issued by a different authority. Although this issue was not the primary focus of the Tribunal's decision, it highlights the importance of procedural compliance in legal proceedings to ensure the validity of orders and notices.

In conclusion, the Tribunal ruled in favor of the appellant, considering the charges collected as rent and not falling under the taxable services categories. The waiver of pre-deposit of tax and penalty was granted, emphasizing the nature of the charges as rent based on legal precedents. The decision showcases the significance of interpreting service charges in line with legal definitions to determine tax liability accurately.