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TMI Blog2023 (12) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... a back to back arrangement. Under section 67(1) of the Finance Act the gross amount charged is for service provided or to be provided. The returnable security deposits are collected for business reasons by the service providers during the subsistence of the contract and they are refunded to the recipient when the contract is completed/terminated. This amount, therefore, cannot be for services and service tax would not be leviable - The submission advanced by the learned counsel for the appellant also deserves to be accepted. The amount collected as imprest from the customers is towards various expenditure incurred during the provision of services such as hotel, food and telephone bills. This expenditure or costs incurred by the service provider in the course of providing the taxable service cannot be considered as the gross amount charged by the service provider for such service provided by him, and accordingly not taxable under section 67 - it is not possible to sustain the demand confirmed by the Commissioner. The penalty and interest, therefore, cannot also be sustained. It would, therefore, not be necessary to examine the contention raised by the learned counsel for the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service tax proposed 2006-07 3,35,37,005 41,04,927 (at 12.24%) 2007-08 1,39,59,012 17,25,334 (at 12.36%) 2008-09 1,00,52,107 12,42,440 (at 12.24%) 2009-10 29,17,317 300,484 (at 12.24%) 2010-11 29,69,317 305,839 (at 12.24%) Total 6,34,34,758 76,79,024 (ii) Non intimation of adjustment of service tax: In the ST-3 Return for the period April-Sept 2007, the appellant claimed adjustment of excess service tax paid during earlier periods to the tune of Rs. 58,17469/-. Such adjustment was not permissible under rule 6 (4B) of the Service Tax Rules, 1994 the 1994 Rules since the appellant had not filed intimation with the service tax department. Accordingly, service tax demand of Rs. 58,17,469/- was proposed; and (iii) The extended period of limitation under the proviso to section 73(1) of the Finance Act was invoked. Penalties under sections 76, 77 and 78 of the Finance Act with interest under section 75 of the Finance Act were also proposed. 5. The appellant filed a reply to the aforesaid show cause notice and denied the allegations. With respect to demand of service tax of Rs. 76.79 lakhs, it was submitted that service tax had already been discharged on the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in denying adjustment of excess payment of service tax for the reason that intimation was not filed by the appellant before the Jurisdictional Officer. 10. The submissions advanced by the learned counsel for the appellant and the learned authorised representative appearing for the department have been considered. 11. The first submission that is required to be examined is whether the Commissioner committed an error in confirming the demand of service tax when, according to the appellant, service tax had been paid on all the collections received during the relevant period. 12. According to the appellant, the year-end balance is the closing figure of any general ledger and the year-end balance is not a receipt nor payment. It is the net summation of all the transactions that took place during the financial year and also earlier financial years. The opening and closing balances are neither collections nor returns made during the year. However, in the show cause notice the year end balance was considered as advances received from the customers during the respective years, and in the impugned order, the Commissioner has considered the same as advances received and confirmed the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3,51,83,392/- was on account of refundable security deposits and no service tax was leviable on these deposits. 18. The Commissioner failed to properly appreciate the nature of the refundable security deposits. The appellant was required to provide infrastructure to the customers, for which the appellant had taken premises on lease from third party suppliers. These suppliers had taken refundable security deposits from the appellant and the appellant recouped the refundable security deposits from the customers. This was a back to back arrangement. Under section 67(1) of the Finance Act the gross amount charged is for service provided or to be provided. The returnable security deposits are collected for business reasons by the service providers during the subsistence of the contract and they are refunded to the recipient when the contract is completed/terminated. This amount, therefore, cannot be for services and service tax would not be leviable. 19. In this connection, reference can be made to a decision of the Tribunal in Murli Realtors Pvt. Ltd. vs. Commissioner of Central Excise, Pune-III 2015 (37) S.T.R. 618 (Tri.-Mumbai), and the relevant paragraph 6.1 is reproduced below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.T.R. 9 (Del.). The Supreme Court upheld the judgment of the Delhi High Court that had struck down rule 5(1) of the 2006 Rules to the extent it included the value of reimbursable expenditure in the value of services. 25. Learned counsel for the appellant also submitted that the Commissioner committed an error in denying the adjustment of excess service tax merely because the appellant had not submitted the intimation. 26. In the service tax return in Form ST-3 for the period April-Sept 2007, the appellant had claimed adjustment of excess service tax paid during earlier period to the tune of Rs. 58,17,469/-. As per rule 6(4A) of the 1994 Rules, an assessee could take adjustment of any excess service tax paid in the earlier tax period in the current tax period. 27. The appellant had paid excess service tax and had reported the adjustment of the same in the ST-3 Return. The non-intimation of the adjustment amount to the Superintendent with details and reason for such adjustment within the prescribed time, is merely a procedural lapse, for which the substantial benefit cannot be denied. 28. In this connection reference can be made to the decision of the Tribunal in Plantech Consul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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