2018 (9) TMI 1586 - AT - Service Tax

Valuation - includibility - whether the electricity charges and air conditioning charges collected by the appellant on actual basis from the tenants is includible in the taxable value for discharging service tax under renting of immovable property? - Held that - It is brought out from records that electricity charges and air conditioning charges are nothing but actual charges which are being reimbursed by the tenants - The decision of the Hon ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (3) TMI 357 - SUPREME COURT OF INDIA has held that such reimbursable charges cannot be included in the taxable value for the purpose of discharging service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of electricity and air conditioning charges in the taxable value for service tax under Renting of Immovable Property Services.

Analysis:
The case involved a dispute regarding the inclusion of electricity and air conditioning charges in the taxable value for service tax under Renting of Immovable Property Services. The officers discovered that the appellant had not included these charges in the taxable value while paying service tax, leading to the issuance of Show Cause Notices for demanding service tax, interest, and penalties. The Original Authority and the Commissioner (Appeals) confirmed the demand, interest, and penalties, prompting the appellant to appeal the decision.

During the proceedings, the appellant's consultant argued that the electricity and air conditioning charges were collected from tenants and were reimbursable expenses, citing a Supreme Court decision to support their position. The appellant, a Research Development Institution leasing property to Biotech Research Industries, contended that these charges were not includible in the taxable value. The consultant also referred to a previous Tribunal decision in favor of the appellant for a different period.

After hearing both sides, the Tribunal considered whether the electricity and air conditioning charges collected on an actual basis from tenants should be included in the taxable value for service tax under Renting of Immovable Property Services. The Tribunal noted that these charges were reimbursable expenses as per the Supreme Court's decision cited by the appellant and a previous Tribunal decision in the appellant's favor. Consequently, the Tribunal held that such charges cannot be included in the taxable value for service tax purposes and set aside the demand, thereby allowing the appeal.

Additionally, the Department filed Miscellaneous Applications for a change in the name of the respondent in the cause title due to the introduction of GST and the resulting change in jurisdiction. The Tribunal allowed the applications, directing the Registry to amend the cause title as requested. As a result, the appeals were allowed with any consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the electricity and air conditioning charges collected on an actual basis from tenants were not includible in the taxable value for service tax under Renting of Immovable Property Services, based on relevant legal precedents and arguments presented during the proceedings.