9911796707
TMI Blog2017 (9) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... e section uses the word consideration and is not qualified by the words commercial or profit . Wherever the legislature wanted to exclude the charges collected on services rendered without profit motive, the same has been specifically taken care of. For e.g. in the case of education services, commercial coaching and training services are only within the purview of the levy of service tax. So the argument of the counsel that only if the charges received for services is in surplus it can be treated as consideration received for services is not acceptable. The Annual Finance Statement (P 51,33,226/-? - The credit has been denied for the reason that the documents are not proper - Held that: - as per proviso to Rule 9 of CENVAT Credit Rules, 2004, if the Assistant / Deputy Commissioner is satisfied after verification of accounts that the assessee is eligible for credit, the same has to be considered and the benefit has to be given to the assessee. On mere deficiency in the document, the credit cannot be denied if the same is otherwise eligible and has been properly accounted - this issue requires to be remanded to the adjudicating authority for verification of documents. Time limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service recipient with regard to the assessee and the owners of the shops. He explained the background of the case stating that Mangal Tirth Estate Ltd. was formed to promote Spencer Plaza on the land belonging to Spencer for construction of approximately one million square feet with a wide range of facilities and equipments and the project envisaged a large number of occupants over 800; that in view of large size of the project, it was decided that a single agency would be entrusted for the task of maintenance. Thus Mangal Tirth Maintenance & Services Ltd. (MMSL) was entrusted with the basic maintenance of the plaza for and on behalf of the occupants. The name of Mangal Tirth Maintenance & Services Ltd. was later changed as M/s. Plaza Maintenance and Services Ltd. which is the assessee herein. (b) In terms of the agreement and the sale deed, every occupant has to enter into the maintenance agreement with assessee. The assessee had entered into individual contracts with various owners of shops/offices of various sizes and with 600 owners approximately in Spencer Plaza to procure and pay for the services for and on behalf of the occupants. That since its inception, pursuant to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city charges and water charges. The assessee is not liable to pay service tax on the reimbursable expenses. (d) The assessee have not collected any further charges other than the electricity and water and remitted the same to the concerned authorities on behalf of the occupants, in terms of Rule 5(1) r/w Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006. (e) The maintenance activity was done by the assessee on no profit no loss basis and there was no commercial consideration accruing to the assessee. This is confirmed by the fact that surplus / deficit amount was accounted to the Plaza Owners Fund Account. The receipts from the owners were credited to the owners account and the deficit, if any were recovered from the owners and credited to the owners account. The sub accounts of individual owners showing receipts and payments are also maintained. The receipts are neither the revenues of PMSL nor the expenses are expenditure of PSML and this confirms the fact that PMSL was acting for and on behalf of the occupants. It is pertinent to point out that this practice was being consistently followed since 1989 much before the commencement of service tax and the accountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded period of limitation. The assessee was under bona fide belief that the activities would not fall under MMR Services. The assessment proceedings by the Income Tax Department support the fact that the arrangement between the assessee and occupants is neither rendering of service nor it has resulted in any consideration at the hands of the assessee to be taxed. Thus, the issue is purely a matter of interpretation of law and facts and therefore the extended period is not invocable. (j) The learned Senior Advocate referred to the scanned copy of receipt in para 8.1 of the Order-in-Original dated 31.8.2009. He explained that though it appears on the receipt that service tax on maintenance charges @ 12.36% is collected by the assessee, as seen from a stamp impression on the scanned copy of the receipt, that no such receipt has been issued by the assessee. That this document was not put to the assessee in the show cause notice and that the assessee refutes the same. (k) With regard to the appeal filed by the department, learned Senior Advocate submitted that the Commissioner has rightly dropped the proceedings for the period after August 2009. The said show cause notice did not cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owners and all the connected expenses both direct and indirect expenses are recovered from the owners. The assessee also renders miscellaneous jobs such as providing plants to individual, doing minor electrical works and charges are collected from owners / occupants based on such works. This amount is admitted as income and related expenses are accounted and income tax has been paid on the surplus. (c) As regards the owners account, the net surplus / deficit are accounted in Plaza Owners Fund account and accounted in current liability and current assets respectively. The deficit arising on account of various expenses are collected. The amount collected by assessee as maintenance charges from the occupants is spent towards (i) common electrical charges (ii) water supply (iii) maintenance of common areas including security arrangements and maintenance of lifts, escalator, water purification plant and other electrical and mechanical components. Lastly, the insurance charges in the building is also collected and paid by the assessee. (d) The electricity is commonly provided to the building of Spencer Plaza by the TNEB and the electric charges are charged actual in case where the use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The assessee enters into agreement with third parties to provide such services. The owners of the apartments are not liable to make any payment to third party since they have not entered into any agreement with TNEB or other service providing agents. The owners have no idea about who is the third party to whom the maintenance services have been contracted with. Thus, the assessee are at liberty to entrust or utilize the services of any agency of their choice in connection with the maintenance and upkeep of the plaza premises. Therefore, they do not fit in as a pure agent . (h) In regard to the issue of eligibility of CENVAT credit, the original authority had scrutinized the documents produced by assessee and found that they are eligible for a claim of ₹ 7,85,686/- only. The balance of the claim cannot be allowed for the reason that the invoices were dated on or after the disputed period but the services were received during the period prior to 16.6.2005. Some of the documents were not proper since these documents did not contain the service tax registration number, bill number etc. For some of the amounts, the assessees have not produced any document at all. That th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as on perusal of records, the following issues emerge for consideration:- (a) Whether the assessees are rendering Management, Maintenance or Repair Services to the occupants and are liable to pay service tax under such category. Whether the amount collected from occupants would be consideration of services and whether they are liable to pay service tax on the amount collected by them from the occupants. (b) Whether the contention of the assessee that they are acting as pure agent of the occupants and there is mutuality of interest is acceptable (c) Whether the assessees are liable to pay service tax on the electricity / water and insurance charges collected (d) Whether the assessees are eligible for the CENVAT credit to the tune of ₹ 51,33,226/- 7. The foremost contention put forward by learned counsel is that they have not received consideration for rendering MMR services from the occupants and that they have been discharging such services on no profit no loss basis. For this he relied upon the order passed by Commissioner of Income Tax (Appeals). It is also contended by him that there being mutuality of interest between the assessee and the occupants, even if an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not consideration. He relied upon the decision by Commissioner of Income Tax (Appeals) stating that no revenue is received by the assessee and therefore it is to be treated that there is no consideration received by them for indulging in such maintenance service. This does not find favour with us for the simple reason that Section 67 of the Finance Act does not mention that the consideration received should be with a profit motive or that the service provided should be a commercial activity. The section uses the word consideration and is not qualified by the words commercial or profit . Wherever the legislature wanted to exclude the charges collected on services rendered without profit motive, the same has been specifically taken care of. For e.g. in the case of education services, commercial coaching and training services are only within the purview of the levy of service tax. So the argument of the counsel that only if the charges received for services is in surplus it can be treated as consideration received for services is not acceptable. 9. Again, the findings by the Commissioner of Income Tax (Appeals) is relevant if any for the purpose of Income Tax Act and cannot be ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and collected charges especially for providing maintenance and upkeep of common area, common amenities, common facilities cannot be considered to be outside the purview of levy of service tax on the ground of mutuality of interest. We, therefore, do not find that the judgment in the cases of Ranchi Club Ltd. (supra) or Kumar Beheray Rathi (supra) is applicable to the facts of the present case. In the said case, one time deposit was collected from the assessees and from the interest earned on the deposit, the various charges for the maintenance services were being rendered by the cooperative housing society formed by the residents. In the present case, the assessee is a company having a separate legal entity and cannot be compared with that of a housing society or a club. 11. The learned counsel has refuted the specimen of the bill that has been scanned and made part of the impugned order. He has argued that no charges for maintenance or service tax has been collected from owners / occupants. The Annual Finance Statement (P & L Statement) clearly shows that the assessees have collected maintenance charges. Therefore, even if we disregard this Bill, there is evidence that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintenance and repair services which have become taxable swith effect from 16.6.2005. Therefore, the argument of the learned counsel that the entire facts were disclosed to the department and being interpretational issue, extended period is not invocable cannot be accepted. In our view, the show cause notice invoking the extended period is therefore sustainable. 15. Coming to the appeal filed by the department, it is very much clear from the order passed by the Commissioner that it is a cryptic order. The Commissioner ought to have considered the earlier order passed by the adjudicating authority. The Commissioner has dropped the proceedings on the ground that the show cause notice relied only upon a letter issued by the assessee to the department furnishing the details with regard to the information called for the period 2/2008 to 8/2009. That this letter does not throw light upon the activity of assessee or the demand raised in the show cause notice. When the assessee has furnished details, the Commissioner ought to have considered such details along with the letter. There is no discussion in the impugned order whether the activities are liable for levy of service tax or not an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
