2018 (6) TMI 716 - AT - Service Tax

Valuation - inclusion of electricity and water charges collected by the respondent - demand of service tax - Held that - These are nothing but reimbursement expenses and cannot be included for demanding service tax under Management, Maintenance or Repair Service - reliance placed in the case of M/S. PLAZA MAINTENANCE AND SERVICES LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI AND VICE-VERSA 2017 (9) TMI 162 - CESTAT CHENNAI , where it was held that assessees are not liable to pay service tax on the actuals that is electricity / water and insurance charges collected and paid to the respective authorities - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Demand of service tax on maintenance charges collected by the respondent.

Analysis:
The case involved a dispute regarding the demand of service tax on maintenance charges collected by the respondent, who was engaged in manufacturing matches and providing Renting of Immovable Property Service. During an audit, it was observed that the respondent was carrying out maintenance work of the building and collecting operational maintenance charges from the occupants without discharging service tax on such amounts. A show cause notice was issued, leading to the original authority confirming the demand, interest, and penalties. However, the Commissioner (Appeals) later set aside the demand, prompting the department to appeal before the Tribunal.

The department argued that service tax should be imposed on the electricity and water charges collected by the respondent under the category of Management, Maintenance, and Repair Service. On the other hand, the respondent's counsel contended that these charges were merely reimbursable expenses and should not be included for service tax. The counsel cited a previous decision of the Tribunal in the case of M/s. Plaza Maintenance and Services Ltd. to support this argument.

After hearing both sides and examining the records, the Tribunal found that the charges in question were indeed reimbursement expenses for electricity and water paid to the respective authorities. As such, they could not be considered for demanding service tax under the category of Management, Maintenance, or Repair Service. The Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the department's appeal, citing the precedent set by the earlier case of M/s. Plaza Maintenance and Services Ltd.

In conclusion, the Tribunal found that the demand of service tax on the maintenance charges collected by the respondent was not justified, as the charges in question were reimbursement expenses and not liable for service tax under the relevant category. The decision of the Commissioner (Appeals) was upheld, and the department's appeal was dismissed.