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TMI Blog2024 (10) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a part of service which is provided by the respondent, hence not taxable. Whether the show cause notice issued in the form of a statement is valid under the negative list regime effective from 01.07.2012? - HELD THAT:- Since the matter is decided on merit i.e. whether security deposit is liable to service tax or otherwise, this issue is not being addressed and same is kept open. The order of Ld. Commissioner is upheld - appeal of department dismissed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C L MAHAR, MEMBER (TECHNICAL) Shri Tara Praksah, Deputy Commissioner (AR) for the Appellant Shri Rahul Patel Chartered Accountant for the Respondent ORDER The instant appeal has been preferred by the Revenue against Order-in-Original No. AHM-SVTAX-000-COM-005-16-17 dated 15.12.2016 passed by the Ld. Commissioner, Audit I Ahmedabad, whereby the Ld. Commissioner has dropped the service tax demand proposed in Show Cause Notices dated 10-05-2014 issued on M/s. Adani Energy Ltd., for the period 2012-2013. 1.1 Briefly stated, the facts of the case are that the respondent assessee is a manufacturer of Compressed Natural Gas and distributes Piped Natural Gas (PNG) to industrial, Commercial and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s down that the security deposit shall be refunded only if the meter and allied equipment are in undamaged working condition. It does not state in clear terms that the security deposit would be refunded fully. 2.2 He further submits that Section 67(3) of the Act provides that the gross income charged for taxable service shall include any amount received towards the taxable service before, during or after provision of such service. Thus the amount collected as security deposit and retained by the assessee shall form part of the taxable value in terms of the said provisions. 2.3 He also submits that, CBEC s Education guide cited by the adjudicating authority in her order, to set aside the demand with effect from 01.07.2012 does not empathically clarify that Service tax is not leviable on security deposit. It lays down certain criterion to ascertain whether the deposit is in the nature of colourable device to escape service tax liability 3. Shri Rahul Patel Learned Chartered Accountant appearing on behalf of the respondent submits that the doctrine of promissory estoppel is inapplicable in fiscal laws and according to which the adjudicating authority is not bound to follow the ratio a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curity deposits. Hence, it was incumbent upon the revenue to challenge the distinctiveness of the two types of receipt with the help of corroborative evidences which the revenue had consciously chosen to refrain from. As a corollary, it can be deducted that the distinctiveness of the Gas Connection Charges and Security Deposits has been accepted by the revenue before issuance of the present Annexure A. Thus, the Ground in form of an allegation that the Security Deposit is nothing but the Gas Connection Charges is an afterthought on the part of the appellant and must not be allowed at this stage. 3.4 He also submits that in para 6 of the Grounds of appeal, the appellant has referred to Section 67(3) to include the amount of Security Deposit in the value of gross income charged. Sub-section (3) is an integral part of the valuation machinery provided by Section 67 and this it is necessary to read it in its holistic framework. Moreover, the machinery shall be evaluated in the context of the changing provision which necessitates a nexus between the amount received and the consideration being received for provisions of service. Use of such service in sub-section (1) as well as sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges is collected for giving gas connection to customers on which respondent had discharged service tax w.e.f. 01.04.2012, whereas 2nd transaction is Security Deposits collected by the respondent from customers for safe custody of various material to be installed at the customer s premises on said security deposits amount revenue demanded service tax. 4.3 To adjudicate the same, following legal provisions need to be looked into : Section 67 of Finance Act deals with the value of taxable service for charging the Service Tax. It reads as follows :- SECTION 67. Valuation of taxable services for charging service tax. - (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall, - (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es value of taxable service only when it has a nexus with the service provided. That is the reason why the expression used in rule 6 is value of taxable services and not amount. The implication is that the tax has to be paid on the value of taxable services attributable to the service provided in a month/quarter as and when it is received . 4.6 It will be appropriate at this stage to refer to some of the decisions that support our view that no service tax can be levied on the security deposit. a) In United Breweries Limited v. State of Andhra Pradesh [(1997) 3 SCC 530], the Supreme Court observed as follows:- 25. It, however, cannot be said that the moneys lying with the company for a long time as security deposit from its customers would automatically become sale proceeds in the hands of the company by efflux of time. The Customers may lose all claims to the deposit amount by operation of law. The company may take the unclaimed deposits to its profit and loss account by treating them as trading receipts. That, however, will not convert the deposits which were not received initially as price into sale proceeds of the tins in which the biscuits were supplied or the bottles in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue s contention is that the said collected amount would fall under the category of Management Maintenance and Repair Services and would be liable to service tax separately. We note that the said amount collected by the appellant from the flat owners is towards the security for the purpose of maintenance of the building and to cover the eventual default made by any of the flat owners for payment of monthly maintenance charges. As per the agreement with the flat owners, the said amount is liable to be refunded to them within the period of Six months from the date of termination of the said agreement. The Adjudicating Authority observed that the genuineness of the said term is very much doubted inasmuch as the appellant had not produced any evidence to show that the said IFMS was ever refunded to anyone. We really fail to understand the said reasoning of the Adjudicating Authority. The amount is refundable in case of termination of the ownership agreement and if no such termination has taken place till date, the amount would not be refunded. As long as the provisions for refund of the said amount in the agreement itself is there, it has to be considered that the said amount is refund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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