Service Tax
TRT-2025-
Cestat Hyderabad
Date:-08-07-22
In:-
Issue Favourable to Tax Payer ?:- 0
Order Date: 8 July 2022
Facts-
- The Appellant, M/s. VITP Private Limited has been engaged in the business of development of IT Parks and such other industrial and commercial places which are subsequently given on rent to a wide spectrum of industries.
- Service tax audit was conducted by the Superintendent, and accordingly, Show Cause Notices were issued for four periods 2007 to 2013. Disputes have arrived and all the four appeals pertaining to the period of June 2007 to June 2013 are disposed of by a common order.
Issue wise order-
The demand and the confirmation of the Service Tax liability is confined to the following issues:-
- Applicability of Service Tax on refundable security deposit collected by the Appellant from its customers- The Tribunal held that refundable deposit cannot be included in the value of taxable service for the purpose of levy of Service Tax.
- Applicability of Service Tax on reimbursement of expenses from its customers on account of water, electricity and diesel expenses incurred for provision of services- The Tribunal held that the expenses are mere reimbursement based on total cost incurred by the Appellant and the total floor area of the customers is not in dispute which goes to show that there is no profit element involved in the above reimbursements. Further, that the Appellant cannot be saddled with the liability on such reimbursements on account of water, electricity and diesel charges and thus the demand of Service Tax on this ground cannot be sustained either and is thereby quashed.
- Applicability of Service Tax on termination charges collected from customers for early termination of lock in period of lease- The Tribunal held that there was no service rendered by the Appellant towards such charges and the same was in the nature of penalty for early termination than the agreed terms of lease. Thus, it is not a consideration for the service of renting of immovable property but a compensation or liquidated damages for reneging the contract of renting. Thus, demand on account of termination charges is also liable to be quashed.
- Eligibility of Cenvat Credit of works contract services and other services for construction of immovable property and Cenvat Credit on event management services for promotion of business of the Appellant-The Tribunal held that the Cenvat Credit of input services as availed by the Appellant for construction of immovable property which was further let out to various customers is eligible. As regards the eligibility of Cenvat Credit on event management services, Rule 2(l) of the Cenvat Credit Rules doesn’t exclude any such service from the eligibility of availment of Cenvat Credit as these expenses have been incurred in the course of furtherance of business and are thus business promotion expenses and the same is eligible as Cenvat Credit.
- Thus all four appeals are allowed with consequential relief
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