2020 (2) TMI 349 - AT - Service Tax

Valuation - management, maintenance or repairs or not - activity of providing parking facility in the Malls - whether the Mall owners receive any payment or consideration from the appellant or not - extended period of limitation - HELD THAT - Section 67(1)(i) clearly stipulates that where the consideration is not wholly or partly consisting of money, it would be such amount in money as, with the addition of service tax charged, is equivalent to the consideration. Further, in Section 67(1)(i) consideration has be taken as the gross amount charged by the service provider. Thus, there is no doubt that the right to collect parking fees given by the mall owners is nothing but a consideration provided to the appellant by the mall owners and the measure of such consideration is the gross income generated through the parking fees. The learned Counsel for the appellant has sought to repudiate the liability on the impugned activity by contending that they are merely operating the parking area which is different from the service of management maintenance and repairs . We are not inclined to accept this distinction because as far as the business activity is concerned qua the appellant, it is operation of the parking area but when this activity is examined qua the mall owners they are providing the service of management, maintenance or repairs to the mall owners. Extended period of limitation - HELD THAT - There was a clear mis-declaration and wilful suppression in as much as the appellant has suppressed the income of parking fees in the relevant returns with an ulterior motive to evade the service tax. They have wilfully designed their mode of operation to evade the service tax - the extended period is invokable in the case. The levy of service tax on the activity under management, maintenance or repair service is upheld - However, the appellant will be entitled to avail Cenvat credit of service tax paid by the service providers and cum duty benefit - The penalties under Section 78 of Finance Act, 1994 need to reworked accordingly - case remanded back to the Adjudicating Authority to re-determine the taxable demand, interest and penalties - appeal allowed partly by way of remand.

Issues Involved:
1. Taxability of the parking fees collected by the appellant.
2. Classification of the appellant's activities under "management, maintenance or repairs" services.
3. Consideration and valuation of services provided.
4. Applicability of extended period for demand due to alleged suppression of facts.
5. Eligibility for Cenvat credit and cum-tax benefit.

Detailed Analysis:

1. Taxability of the Parking Fees Collected:
The appellant operates parking areas in five malls, collecting parking fees through a third-party agency. The primary contention is whether this activity is taxable under the Finance Act, 1994. The service tax department issued three show cause notices alleging that the appellant's activities amounted to "management, maintenance or repairs" services, thus attracting service tax. The Tribunal upheld the order-in-original, confirming that the parking fees collected by the appellant are subject to service tax under the specified category.

2. Classification under "Management, Maintenance or Repairs" Services:
The appellant argued that their activity of providing parking facilities does not equate to "management, maintenance or repairs" services since no direct payment or consideration is made to the mall owners. However, the Tribunal found that the appellant's activities fall within the definition of "management, maintenance or repairs" as per Section 65(105)(zzg) of the Finance Act, 1994. The Tribunal emphasized that the service does not require direct pecuniary consideration from the mall owners; the right to collect parking fees itself constitutes valid consideration.

3. Consideration and Valuation of Services:
The Tribunal referred to Section 67 of the Finance Act, 1994, which defines the valuation of taxable services. It concluded that the right to collect parking fees provided by the mall owners is a form of consideration. The gross income generated through parking fees represents the measure of such consideration. The Tribunal also accepted that the income shown in the balance sheet as parking fees should be considered as cum-tax value for determining service tax, allowing the appellant to compute taxable income after abating the amount of service tax from the gross income.

4. Applicability of Extended Period for Demand:
The appellant contended that no extended period should be invoked as there was no willful suppression of facts, given that they submitted regular service tax returns. The Tribunal, however, found clear mis-declaration and willful suppression by the appellant, who did not disclose the parking fees income in the relevant returns, aiming to evade service tax. Therefore, the Tribunal upheld the invocation of the extended period for demand.

5. Eligibility for Cenvat Credit and Cum-Tax Benefit:
The Tribunal accepted the appellant's claim for Cenvat credit of the service tax paid on input services provided by the third-party agency or other service providers. Additionally, the Tribunal acknowledged that the taxable income should be computed after considering the cum-tax value, thereby allowing the appellant to benefit from the cum-tax provision.

Conclusion:
The Tribunal upheld the order-in-original regarding the legality of service tax levy on the appellant's activities under "management, maintenance or repair services." However, it allowed the appellant to avail Cenvat credit and cum-tax benefit. The case was remanded to the Adjudicating Authority to re-determine the taxable demand, interest, and penalties in light of these findings. The appeal was allowed to the extent indicated, with the order pronounced in open court on 03/02/2020.

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