2015 (6) TMI 914 - AT - Service Tax

Waiver of pre deposit - Management, Maintenance or Repair service on the Annual Maintenance Charges - Held that - Amount received as AMC is not deposited in the Govt. treasury. Further there is no constitutional basis to hold that services rendered as a statutory function are ipso facto immune from liability to service tax. Thus, the decision of CESTAT in the case of Maharashtra Industrial Development Corporation (2014 (11) TMI 311 - CESTAT MUMBAI) may be per incuriam of the Constitution of India. - prima facie it had added the maintenance charges in the lease rent while computing the taxable amount and paid the service tax thereon and if that is taken into account, the short payment would come in the range of ₹ 5 lakhs. Accordingly, we order pre-deposit of ₹ 5 lakhs along with proportionate interest within four weeks - Partial stay granted.

Summary

Issues:
Service tax demand on Annual Maintenance Charges (AMC) collected by the appellant from lessees, applicability of service tax on AMC, interpretation of Management, Maintenance, and Repair service, comparison with the Maharashtra Industrial Development Corporation case, adequacy of service tax payment by the appellant.

Analysis:
The appellant filed a Stay Application and Appeal against the Order-in-Original confirming a service tax demand on AMC collected from lessees. The appellant argued that the AMC is part of lease rent and cited the Maharashtra Industrial Development Corporation case, claiming that services provided under statutory obligations are not taxable. However, the tribunal found that AMC is separate from lease rent as per the agreement and falls under Management, Maintenance, and Repair service. The tribunal distinguished the Maharashtra case, stating that AMC funds were not deposited in the government treasury, and statutory functions do not automatically exempt from service tax.

The tribunal considered the appellant's service tax payment history and noted a shortfall of around Rs. 5 lakhs. Despite the appellant's argument that they included maintenance charges in lease rent for service tax calculation, the tribunal ordered a pre-deposit of Rs. 5 lakhs within four weeks. Compliance was required by a specified date, with further recovery stayed pending appeal. Failure to comply would result in appeal dismissal for non-payment.

In conclusion, the tribunal upheld the service tax demand on AMC, emphasizing the distinction between lease rent and maintenance charges. The tribunal required a pre-deposit from the appellant to continue the appeal process, ensuring compliance with tax liabilities. The judgment clarified the applicability of service tax on specific services and highlighted the importance of accurate tax calculations and payments in such cases.