2013 (5) TMI 145 - AT - Service Tax

Liability to pay service tax under the category of maintenance services - Held that - As no tax is payable on the ground that the maintenance was being done on behalf of the appellants themselves and that it was not a service rendered to the individual shop keepers is not tenable. If they were doing maintenance for themselves, there would not have been any reason for collecting the exact amount of service charges along with tax from the shop keepers. For the period from June 07 to March 08, the appellants have already paid an amount of Rs.13 lakhs claiming CENVAT credit of Rs.18 lakhs. As such, for the balance period, the tax demand is little over Rs.49 lakhs towards which no payment has been made. There are also no details available regarding the amount collected towards electricity and water charges along with service charges. Further, there are no details available to determine how much credit would be available to the appellants especially when they are challenging the taxability itself. Thus the appellants directed to predeposit 50% of the balance amount of Rs.49 lakhs in cash within a period of 4 weeks from today and report compliance on 23.7.2012. This deposit will be in addition to Rs.13 lakhs stated to have been paid earlier.

Summary

Issues:
1. Liability to pay service tax for maintenance services provided in a city center mall.
2. Applicability of service tax on charges incurred for maintenance of common areas.
3. Entitlement to credit of service tax paid by service contractors engaged for maintenance work.

Analysis:
The judgment revolves around the liability of the appellants to pay service tax for maintenance services provided in a city center mall. The advocate for the appellants argued that since the common areas were maintained by the appellants as per an agreement with individual shop owners, they were not rendering any service and thus not liable to pay service tax under the category of 'maintenance services'. However, the Tribunal found this argument prima facie untenable as the appellants were recovering charges for maintenance from the shop owners and were also paying service tax through service contractors. The Tribunal noted that the appellants were collecting service charges along with service tax from the shop keepers, indicating that they were indeed providing a service and not merely fulfilling their own obligation.

Regarding the recovery made by the appellants, it was mentioned that it included charges for electricity and water used in the common areas. However, the advocate was unable to specify the percentage of recovery attributable to electricity and water charges. The Tribunal emphasized the lack of concrete figures in this regard and directed the appellants to make a predeposit of an appropriate amount due to the absence of specific amounts mentioned in the order.

Another aspect discussed was the entitlement to credit of service tax paid by the service contractors engaged for maintenance work. The Tribunal highlighted the need to examine this aspect with reference to invoices and details not available in the case records. It was mentioned that the appellants had claimed credit for a specific amount before the adjudicating Commissioner for a particular period.

In conclusion, the Tribunal found the argument that no tax was payable due to maintenance being done on behalf of the appellants themselves not tenable. The appellants were directed to predeposit 50% of the balance tax amount within a specified period, considering various factors such as the amount already paid, lack of details on electricity and water charges, and the challenge to taxability. Compliance with the predeposit directive would result in the waiver of the remaining tax, interest, and penalty amounts during the appeal's pendency.