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2020 (1) TMI 986 - AT - Service TaxValuation - inclusion of value of the electricity charges recovered as reimbursements from Gujarat Gas - liability to pay Service tax on the electricity charges on actual basis paid by them - HELD THAT - The contract puts the liability of expenditure of Service Tax on Gujarat Gas and they have also placed a separate meter for assessment of the actual electricity consumed. The issue is squarely covered by the decision of this Tribunal in the case of M/S. KIRAN GEMS PVT LTD VERSUS C.C.E. S.T. -SURAT-I 2018 (11) TMI 1388 - CESTAT AHMEDABAD where after relying on the decision of Tribunal in the case of M/S ICC REALITY (INDIA) PVT LTD OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE 2013 (12) TMI 854 - CESTAT MUMBAI , M/S. HOTEL LAKE VIEW ASHOK VERSUS CGST, CE CC, BHOPAL 2018 (9) TMI 500 - CESTAT NEW DELHI and M/S S.B. DEVELOPERS LIMITED VERSUS CST, NEW DELHI 2018 (5) TMI 1673 - CESTAT NEW DELHI , it was held that electricity charges reimbursed to the service provider by the service recipient are not includable in gross value of renting of immovable property service - the said principle is equally applicable in the instant case. Appeal allowed - decided in favor of appellant.
Issues:
1. Service tax liability on electricity charges reimbursement. 2. Interpretation of contractual terms. 3. Applicability of previous tribunal decisions. 4. Exclusion of electricity charges from assessable value. Analysis: 1. Service tax liability on electricity charges reimbursement: The appeal was filed against the Commissioner (Appeals) order confirming the demand of Service Tax. The appellant, engaged in providing services to a company, argued that they were paying Service tax for fixed charges but not including the value of electricity charges recovered as reimbursements for Service Tax payment. The contract specified that electricity charges for certain equipment would be borne by the company they were providing services to. The tribunal examined the issue and held that the electricity charges reimbursed to the service provider by the service recipient were not includable in the gross value of the service, citing previous tribunal decisions and a Supreme Court ruling. 2. Interpretation of contractual terms: The tribunal analyzed the specific clause in the contract between the appellant and the company receiving services. The contract stated that the firm shall bear and pay all property taxes, municipal taxes, rents, rates, and electricity bills for utilities utilized at the outlet. However, it also mentioned that electricity charges for specific equipment would be borne by the company receiving services. The tribunal found that this clause placed the liability of electricity charges on the company receiving services and noted the presence of a separate electric meter for assessing actual electricity consumption. 3. Applicability of previous tribunal decisions: The appellant relied on various tribunal decisions to support their argument that electricity charges reimbursed should be excluded from the assessable value for Service Tax. The tribunal considered these precedents, including the case of Kiran Gems Pvt. Ltd., and found that the principle established in those cases was applicable in the present situation. The tribunal also referenced decisions by the Hon’ble Apex Court and other tribunal cases to support their conclusion. 4. Exclusion of electricity charges from assessable value: After evaluating the arguments and examining the contractual terms, the tribunal concluded that the electricity charges reimbursed to the service provider by the service recipient should not be included in the assessable value for Service Tax. Citing previous tribunal decisions and a Supreme Court ruling, the tribunal allowed the appeal, emphasizing that the principle established in those cases applied to the current scenario. The decision was pronounced in open court on 20/12/2019.
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