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TMI Blog2022 (2) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... alue towards the provisions of services of renting of immovable property held that the price, which is the amount of consideration for providing service of renting of immovable property is just the rent received. It was specifically held that for the purpose of levy of Service Tax, it shall only be the amount accrued to service which shall be taxable, notional interest cannot be added to the value of such services. The adjudicating authority has wrongly considered the interest received on security deposit as part of consideration received by appellant for providing the Business Auxiliary Service without establishing as to how the said security deposit is includable in the amount of consideration charged for the taxable value provided by the appellant M/s. Khoday India Ltd. - This Tribunal, Mumbai Bench also in the case of MURLI REALTORS PVT. LTD., MAGRPATTA TOWNSHIP DEVELOPERS CONSTRUCTION CO. LTD., JAIN CONSTRUCTION, SAI CONSTRUCTION PVT. LTD., INDIA LAND INFRASTRUCTURE DEVELOPMENT PVT. LTD., RVS HOSPITALITY DEVELOPMENT PVT. LTD., VANSUM INDUSTRIES AND THE MANJRI STUD FARM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE-II [ 2014 (9) TMI 461 - CESTAT MUMBAI] while rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul mis-declaration nor wilful suppression. The extended period therefore has wrongly been invoked. The question as framed is adjudicated in negative holding that the amount of interest received by the appellant, the service provider from the recipient should not be included in the gross value of the amount of consideration received by the appellant, it being the appellant s income from his own money deposited with the recipient of service. It accordingly is held to have no nexus with the service of Business Support service being provided to M/s. Khoday - appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL NO. 70465 of 2016 - FINAL ORDER No. 70070/2022 - Dated:- 23-2-2022 - SHRI P V SUBBA RAO, MEMBER (TECHNICAL) AND MRS RACHNA GUPTA, MEMBER (JUDICIAL) Shri A K Batra, Advocate for the Appellant Shri T M Siddiqui, Authorised Representative for the Department ORDER The present appeal has been filed to assail Order-in-Original passed by the Adjudicating Authority bearing No. 38/2015-16 dated 29.1.2016. The facts in brief relevant for the purpose are as follows: 1.1 That the appellants are engaged in providing the services under the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants were receiving the commission at fixed rate on principle cost basis inclusive of the amount of service tax. The duty liability on the amount of commission admittedly has been discharged regularly by the appellant under the category of Business Auxiliary Services. It is submitted that the demand in dispute is on a different amount than said commission and thus is alleged to have wrongly been confirmed merely on the basis of presumption. The reason for confirming the said demand is alleged to be absolutely vague. The said amount of ₹ 5 crores (3 + 2) is mentioned to be a refundable security deposit and infact an investment of appellant s own money. The interest which accrued on the said investment and being received by the appellant, therefore, has wrongly been included in the gross value of consideration received by the appellant towards providing Business Auxiliary Services to M/s. Khoday India Ltd. Learned Counsel has mentioned that issue of income by interest to not to be taxable is no more res integra, Reliance has been placed on following cases: 1. V S T Industries ltd. vs. CCE Hyderabad [1998 (97) ELT 395 (SC)]; 2. Ashiana Maintenance Service LLP vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is submitted by the learned Departmental Representative that the interest received by the appellant on the security deposit made by him with his service recipient are definitely an additional amounts of consideration received by the appellant from the said service recipient i.e. M/s. Khoday India Ltd. Accordingly the same has rightly been held as a part of gross amount charged for the service provider. It is submitted that for the determination of correct assessable value, the amount of interest earned is liable to be included in total value calculatable for the purpose of payment of service tax. During the period from January 2010 to January 2014. The confirmation of short payment of service tax amounting to ₹ 70,06,164/- by the adjudicating authority below is therefore impressed upon as correct by learned Departmental Representative. It is further submitted that the appellant had never informed the department regarding the receipt of interest on security amount from M/s. Khoday India Ltd. This fact came to the notice of the department only after the appellants records were audited by the officer of Central Excise and Service Tax Commissionerate, NOIDA. The said concealm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. The perusal of this provision makes it clear that the taxable value is the amount of consideration (for providing the services whether mandatory or not mandatory form but the amount) charged by the service provider for the taxable service being provided by him. It also clarifies that if any benefit accrues to either of the parties whether to service provider or to service recipient which is not arising in lieu of taxable service, the same shall not be liable to be added to the valuation of services. The Hon ble Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement with respect to security deposit reads as follows: 1. You shall give a deposit of ₹ 5 crore (₹ 3 crore for Haryana + ₹ 2 crore for Himachal Pradesh) on which we shall pay an interest @25% on quarterly basis. As a security for the repayment of this deposit upon completion of this agreement, we shall give you post dated cheques of ₹ 5 crore drawn in your favour. These cheques can be encashed by you after 60 days on the completion / termination of the agreement period without any confirmation from us. A perusal thereof makes it abundantly clear that the amount of Rs. Five crore (₹ 3 crore for Haryana + ₹ 2 crore for Himachal Pradesh), interest whereupon i.e. the disputed amount, was purely on security deposit which was to be remained deposited with M/s. Khoday India Ltd. till the termination of the impugned agreement vide which the appellant agreed to be the service provider of Business Auxiliary Services to said M/s. Khoday India Ltd. by aiding to distribute, promote and sell later s liquor products. The perusal also clarifies that the amount of ₹ 5 crores was not an amount towards providing the said Business Auxiliary Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, were taxable which are not mentioned in negative list as were provided under section 66D of Finance Act 2012. The service by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount are mentioned in clause (n) and (i) of said section 66 D hence are not to be taxable. We therefore, opine that the Adjudicating Authority has exhibited sheer ignorance to these statutory provision while passing the order under challenge. 14. Coming to the applicability of Rule 3 and 4 of Valuation Rules based whereupon the demand was proposed in the impugned Show Cause Notice we hold that these Rules are nothing but the explanation of section 67. Once the value of interest received cannot be considered to be a part of the gross value for taxable service in terms of section 67 of Finance Act, the same cannot be made inclusive in terms of said Rule 3 of the Valuation Rules. As already discussed above, the value as was received by the appellants as consideration, in the form of commission, providing the Business Auxiliary Services, the liability thereof has admittedly been discharged by the appellant, the interest received is apparent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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