2018 (9) TMI 665 - HC - Service Tax

Maintainability of appeal - Valuation issue - Nature of activity - sale or service - supply of electricity - Whether the Tribunal is correct in holding that the supply of electricity by the Respondent herein to their tenants / clients amounts to sale of goods and not supply of service ? - Whether the supply of electricity by the Respondent herein to their tenants / clients is an essential and integral part of the service namely Renting of Immovable Property Services , as provided under Section 65 (105) (zzzz) of Finance Act, 1994? Held that - The questions raised by the Revenue whether the sale of goods would amount to supply of service for purpose of valuation is an issue which directly relates to valuation of goods. It is relevant to note that the Central Government had issued a Notification No. 12/03 ST dated 20th June, 2003 exempting supply of good from service tax. This prima facie would suggest that otherwise the value of goods supplied by a service provider may be included in the valuation of the services, in the absence of the Notification. However, these are all issues relating to valuation and not within the jurisdiction of this Court. The common impugned order relates to valuation of services for the purposes of assessment under the Act - The challenge to the impugned order dated 18 April, 2013 cannot be entertained by us in view of Section 35G (i) of the Central Excise Act, 1944 as made applicable in terms of Section 83 of the Act. The appeal, if any would be before the Hon ble Supreme Court in terms of Section 35L(1) (b) of the Central Excise Act, 1944 read with Section 83 of the Act. The Appeal is disposed of as not maintainable with liberty to the Revenue to approach the Hon ble Apex Court, if so advised.

Summary

Issues:
- Interpretation of whether the supply of electricity by the Respondent to tenants amounts to "sale of goods" or "supply of service."
- Determining if the supply of electricity is an essential part of the service of "Renting of Immovable Property Services."

Analysis:
1. The Appeals challenge a common order by the Tribunal regarding the inclusion of electricity charges in the assessable value of renting immovable properties under the Finance Act, 1994. The Respondent argued that electricity is goods and not a service, thus should not be part of the assessable value. The Tribunal accepted this claim, leading to the current dispute.

2. The Court clarified that the issue in the Appeals pertains to the valuation of services for renting immovable property. The appropriate remedy to challenge the order lies with the Supreme Court, as per relevant sections of the Central Excise Act, 1944. The Court lacks jurisdiction over valuation-related matters.

3. The Court highlighted that the issue revolves around the valuation of services and not the taxability of the service itself. Citing precedents and legal provisions, the Court emphasized that questions related to the valuation of goods or services fall outside its jurisdiction.

4. The decision in a previous case cited by the Revenue was deemed inapplicable to the current scenario, as it concerned the taxability of a specific service rather than the valuation of services provided while renting immovable property. The Court stressed the distinction between issues of taxability and valuation.

5. Referring to another case, the Court reinforced its stance that matters of valuation for assessment purposes do not fall within its jurisdiction. The Court reiterated that disputes related to taxability or valuation of goods/services are to be addressed at a higher judicial level.

6. Ultimately, the Court concluded that the challenge to the Tribunal's order cannot be entertained due to jurisdictional limitations. The Appeals were deemed not maintainable, with the option for the Revenue to approach the Supreme Court for further recourse.

This comprehensive analysis of the judgment showcases the intricate legal considerations and the Court's reasoning behind its decision regarding the interpretation and valuation of services provided in the context of renting immovable property.