9911796707
TMI Blog2024 (3) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... t Ltd Vs Commissioner, Central Excise, Jaipur [ 2023 (10) TMI 1166 - CESTAT NEW DELHI] , where the Bench held that service tax could not have been levied on the notional interest calculated by the department on the interest fee security deposit collected by the appellant from tenants. In the present case, the appellant had not disputed their liability to pay service tax on the rental amount of the property as they are paying service tax on the same and therefore the dispute is limited regarding the liability to pay service tax on the notional interest earned by them on the amount of security deposits received from the service recipients - no service tax can be levied on the appellant in respect of the notional interest earned on the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C, STD-1 Jaipur The issue involved in all the appeals are identical and hence the same are being disposed of by this common order. 2. The appellant is registered under the Service Tax in the category of Renting of Immovable Property Service under erstwhile section (65) (105) (zzzz)of the Finance Act, 1994 and is engaged in providing the said services. The appellant apart from renting out the property to the Lessee/tenant had also collected interest free refundable security deposit of Rs.2,64,00,000/- for the period October 2007 to July 2012. The service tax audit was conducted by the department in January 2013 at the premises of the appellant and it was found that the assessee had received the said amount as interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned on the security amount can be included in the taxable value only if the said amount has nexus with the depression of the prices, i.e., amount of rent charged by the assessee for renting out the properties to the lessee. According to the appellant, neither the advances received by them in the form of security deposit has impacted on lowering down the rental charges collected by them nor the department has discharged the burden of proving that the interest free security deposit has influenced the amount of rent fixed for renting out the properties and therefore no amount of notional interest can be considered as any additional consideration. The learned Counsel relied on the decisions of this Tribunal in support of his contentions. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is discharging Service Tax liability. The security deposit is taken for a different purpose altogether. It is to provide for a security in case of default in rent by the lessee or default in payment of utility charges or for damages, if any, caused to the leased property. Thus, the security deposit serves a different purpose altogether and it is not a consideration for leasing of the property. The consideration of the leasing of the property is the rent and, therefore, what can be levied to Service Tax is only the rent charged and no notional interest on the security deposit taken can be levied to tax. There is no provision in Service Tax law for deeming notional interest on security deposit taken as a consideration for leasing of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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