Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2018 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1499 - AT - Service TaxValuation - Renting of immovable property service - inclusion of amount towards Repair and Maintenance services - whether the value of repair and maintenance, which was incurred by RBPSSK, on the sugar factory needs to be included on the value, as received for renting of immovable proper or otherwise; and whether consequential interest and penalties on demand on such value needs to be upheld? Held that - the adjudicating authority in the impugned order has specifically recorded that the lessee RBPSSK had undertaken the repair and maintenance of the plant and machinery of the sugar factory before it was put to use for manufacturing purpose - the said value/ consideration is not towards the lease rent, which is collected by the appellant from various lessees towards the loan taken by the principal sugar factory YSSK. The issue of inclusion of the consideration/ expenditure made on repairs and maintenance cannot be included for demand of tax under Renting of property services is now settled by the Bench in the case of Maharashtra State Co-op Bank 2017 (9) TMI 298 - CESTAT MUMBAI , where it was held that the said expenditure cannot be considered as extra consideration towards the lease rent. Lease rent is the only amount which is received by the appellant on account of lease of the premises to the lessee. Therefore, the demand on expenditure towards repair and maintenance is not sustainable. Liability of interest - Held that - the interest liability arises on the appellant in respect of amount received as lease rent and that needs to be discharged if not done so. Penalty - Held that - the amounts spent towards repair and maintenance cannot be included in the value for calculating tax liability, penalty imposed by the adjudicating authority on the appellant herein needs to be set aside. Appeal allowed in part.
Issues:
Service Tax liability on repair and maintenance expenses undertaken by the lessee and lease rent received. Analysis: The appeal questioned whether the appellant should discharge Service Tax liability on repair and maintenance expenses undertaken by the lessee and lease rent received under the category of 'Renting of immovable property.' The appellant, a cooperative bank, leased out a sugar factory to various entities after taking over the business due to non-payment of loans. The issue revolved around whether the repair and maintenance costs incurred by the lessee should be included in the taxable value. The adjudicating authority confirmed the demand for Service Tax along with interest, including the repair and maintenance costs in the taxable value. The appellant contended that they had already discharged the Service Tax liability for renting immovable property but challenged the inclusion of repair and maintenance costs in the taxable value. They cited a similar case where such costs were excluded from the taxable value. The respondent supported the lower authorities' findings that the Service Tax liability was discharged only after an investigation. Upon careful consideration, the tribunal examined whether the repair and maintenance costs incurred by the lessee should be part of the taxable value for renting immovable property. Referring to a previous case, the tribunal noted that such costs should not be considered as additional consideration towards lease rent. The tribunal set aside the demand related to repair and maintenance costs. However, they held the appellant liable for interest on the lease rent if not already discharged. Regarding penalties, the tribunal concluded that since the repair and maintenance costs were not included in the taxable value, the penalties imposed on the appellant should be set aside. The appeal was disposed of accordingly, with the penalties being revoked.
|