2019 (3) TMI 1326 - AT - Service Tax

Levy of service tax - Renting of immovable property Services - electricity charges recovered by the appellant/ coal company from its tenants (occupants of shops etc.,) - clubbing of such charges with the rent receipt - Held that - As the appellant has recovered the electricity charges on actual consumption basis and not on floor area basis, for their shop premises, thus electricity charges cannot be clubbed with the amount of rent, for purpose of levy of Service Tax - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether electricity charges recovered by a coal company from its tenants can be aggregated with rent receipt for levy of Service Tax under "Renting of immovable property Services."

Analysis:

Issue 1: Electricity charges aggregation for Service Tax levy

The primary issue in this appeal pertains to the aggregation of electricity charges recovered by the appellant coal company with the rent receipt for the purpose of levying Service Tax under "Renting of immovable property Services." The appellant demonstrated through the agreement/allotment letters that the electricity charges were to be paid based on actual consumption by the tenants, separate from the rent amount. The appellant maintained proper books of account, recording party-wise rent amounts and electricity charges for each month during the disputed period. The appellant rented out premises for commercial purposes and claimed reimbursement of electricity charges based on actual consumption by the tenants, as evidenced by the Chartered Accountant's certificate and CERA audit report. The Tribunal observed that since the electricity charges were recovered on an actual consumption basis and not on the floor area basis, they cannot be clubbed with the rent amount for the purpose of Service Tax levy.

Decision:
The Tribunal held that the electricity charges, being recovered on an actual consumption basis and not as part of the rent, cannot be aggregated with the rent amount for the purpose of levying Service Tax under "Renting of immovable property Services." Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, who is entitled to consequential benefits.

This detailed analysis of the judgment highlights the key arguments presented, the evidence provided by the appellant, and the Tribunal's reasoning leading to the decision in favor of the appellant regarding the aggregation of electricity charges with the rent receipt for Service Tax levy.