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2017 (9) TMI 162 - AT - Service TaxManagement, Maintenance and Repair Service - commercial complex / shopping mall - providing services at no profit no loss - case of appellant is that they are not liable to pay any service tax, for the reason that they are neither collecting any service charges and that there is no relationship of service provider and service recipient with regard to the assessee and the owners of the shops - pure agent - Held that - it is clear that the assessee has collected charges over and above actuals (electricity, water) from the occupants of the plaza premises. Such charges have been collected for rendering management and maintenance activities of the premises. The common areas and lift facility etc. is managed / maintained by the assessee. Section 67 of the Finance Act does not mention that the consideration received should be with a profit motive or that the service provided should be a commercial activity. The section uses the word consideration and is not qualified by the words commercial or profit . Wherever the legislature wanted to exclude the charges collected on services rendered without profit motive, the same has been specifically taken care of. For e.g. in the case of education services, commercial coaching and training services are only within the purview of the levy of service tax. So the argument of the counsel that only if the charges received for services is in surplus it can be treated as consideration received for services is not acceptable. The Annual Finance Statement (P & L Statement) clearly shows that the assessees have collected maintenance charges. Therefore, even if we disregard this Bill, there is evidence that assessee have collected maintenance charges for the services rendered. Thus, we hold that assessee is liable to pay service tax on the charges collected for rendering management, maintenance or repair services of Spencer Plaza. Whether the contention of the assessee that they are acting as pure agent of the occupants and there is mutuality of interest is acceptable? - Held that - The contention of the assessee that there is mutuality of interest is also not correct for the reason that the assessee is a company registered under the Companies Act, 1956 and is therefore a separate legal entity. Thus, the assessee as a separate legal entity having entered into contracts with third persons for providing services for and on behalf of occupants and collected charges especially for providing maintenance and upkeep of common area, common amenities, common facilities cannot be considered to be outside the purview of levy of service tax on the ground of mutuality of interest - the assessee is a company having a separate legal entity and cannot be compared with that of a housing society or a club. Whether the assessees are liable to pay service tax on the electricity / water and insurance charges collected? - Held that - assessees are not liable to pay service tax on the actuals that is electricity / water and insurance charges collected and paid to the respective authorities. The demand on such amount is unsustainable and requires to be set aside which we hereby do - reliance placed in the case of Intercontinental Consultants & Technocrats (P) Ltd. 2012 (12) TMI 150 - DELHI HIGH COURT . Whether the assessees are eligible for the CENVAT credit to the tune of ₹ 51,33,226/-? - The credit has been denied for the reason that the documents are not proper - Held that - as per proviso to Rule 9 of CENVAT Credit Rules, 2004, if the Assistant / Deputy Commissioner is satisfied after verification of accounts that the assessee is eligible for credit, the same has to be considered and the benefit has to be given to the assessee. On mere deficiency in the document, the credit cannot be denied if the same is otherwise eligible and has been properly accounted - this issue requires to be remanded to the adjudicating authority for verification of documents. Time limitation - Held that - It is seen from the records that they have collected maintenance charges and have not disclosed the same to the department. Even if we brush aside the specimen bill that is made part of the impugned order, the annual financial statements as well as other documents evidence that the assessee have collected maintenance charges from occupants - the show cause notice invoking the extended period is therefore sustainable. Appeal allowed in part and part matter on remand.
Issues Involved:
1. Liability of the assessee to pay service tax under Management, Maintenance, or Repair Services (MMR). 2. Whether the assessee acted as a pure agent of the occupants and the mutuality of interest. 3. Liability of the assessee to pay service tax on electricity, water, and insurance charges collected. 4. Eligibility of the assessee for CENVAT credit. 5. Invocation of the extended period of limitation. 6. Validity of the Commissioner’s order dropping proceedings for the period after August 2009. Detailed Analysis: 1. Liability to Pay Service Tax Under MMR Services: The assessee, M/s. Plaza Maintenance and Services Ltd. (PMSL), argued that they did not receive consideration for rendering MMR services and operated on a no-profit-no-loss basis. The Tribunal rejected this argument, stating that Section 67 of the Finance Act does not require the consideration to be profit-oriented or commercial. The charges collected for services like common area maintenance, security, and lift maintenance are considered valid consideration under the law. The Tribunal concluded that the assessee is liable to pay service tax on these charges. 2. Pure Agent and Mutuality of Interest: The assessee claimed to act as a pure agent for the occupants, arguing mutuality of interest. The Tribunal found this claim unconvincing, noting that the assessee is a separate legal entity under the Companies Act, 1956, and the occupants had no direct legal obligation with third-party service providers. Thus, the assessee does not qualify as a pure agent, and mutuality of interest does not apply. 3. Liability on Electricity, Water, and Insurance Charges: The Tribunal referred to the judgment in Intercontinental Consultants & Technocrats Pvt. Ltd. and Sangamitra Services Agency, which held that actuals like electricity and water charges are not subject to service tax. Following judicial discipline, the Tribunal ruled that the assessee is not liable to pay service tax on these actuals. 4. Eligibility for CENVAT Credit: The assessee claimed CENVAT credit of ?51,33,226/-, but the adjudicating authority allowed only ?7,85,686/-, citing improper documentation. The Tribunal remanded this issue for verification of documents, emphasizing that credit should not be denied on mere procedural deficiencies if the claim is otherwise valid. 5. Extended Period of Limitation: The Tribunal upheld the invocation of the extended period, noting that the assessee had collected maintenance charges without disclosing them to the department. The argument that the issue was interpretational and thus did not warrant the extended period was rejected. 6. Validity of Commissioner’s Order Dropping Proceedings: The Tribunal found the Commissioner’s order dropping proceedings for the period after August 2009 to be cursory and lacking detailed consideration of earlier findings. The Tribunal remanded this issue for denovo adjudication, directing the Commissioner to re-evaluate the liability to service tax. Conclusion: The Tribunal partly allowed the appeal by setting aside the demand on actuals (electricity, water, insurance), remanded the issue of CENVAT credit eligibility, and directed the adjudicating authority to quantify the service tax liability on MMR services. The appeal filed by the department was allowed by way of remand for denovo adjudication.
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