Custom, Excise & Service Tax Tribunal
Lancor Maintenance And Services Ltd vs Commissioner Of Gst&Amp;Cce (Chennai ... on 10 July, 2018
1
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.: ST/00396/2010
(Arising out of Order-in-Appeal No. 54/2010 (MST) dated 26.03.2010
passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Lancor Maintenance & Services Ltd., : Appellant
VTN Square, 58 GN Chetty Road,
T. Nagar, Chennai-600 017
Versus
The Commissioner of G.S.T. & Central Excise, : Respondent
Chennai South Commissionerate Appearance:-
Shri. V. S. Manoj, Advocate for the Appellant Shri. R. Subramaniyan, AC (AR) for the Respondent CORAM:
Hon'ble Shri Madhu Mohan Damodhar, Member (Technical) Hon'ble Shri P Dinesha, Member (Judicial) Date of Hearing/Decision:10.07.2018 Final Order No. 42639 / 2018 Per P. Dinesha :
The assessee has come in appeal against the Order-in-Appeal No. 54/2010 (MST) dated 26.03.2010 passed by the Commissioner of G.S.T. & Central Excise (Appeals), Chennai, whereby the Commissioner (Appeals) has upheld the Order of the Original 2 Authority thereby confirming the demand of service charges in respect of the electricity charges paid in advance.
2.1 Today when the matter came up for hearing, Ld. Advocate Shri. V. S. Manoj appeared for the appellant and Ld. AC (AR) Shri. R. Subramaniyan appeared for the Revenue.
2.2 During the course of hearing, Ld. Advocate pointed out that the Show Cause Notice issued on 29.04.2008 sought to levy service tax on the electricity charges and further pointed out that the Revenue had faltered in invoking the extended period of limitation since the period of dispute relates to 2003-04 and 2006-07. 2.3 He further submitted that the assessee had entered into a lease agreement with its tenants for the supply of uninterrupted electricity; that the tenants were required to pay electricity charges as per the consumption; that the appellant being landlord would pay the electricity charges upfront for convenience which would be recovered later on from the tenants; that they would keep a margin of 2% extra to compensate as the payment made would be recovered much later; that they were paying service tax under the category of Renting of Immovable Property; that there was no service provider- client relationship since it is not the case of management of property of tenant, etc. 3 2.4 He also relied on the decision of the Mumbai Bench of the Tribunal in the case of M/s. ICC Reality (India) Pvt. Ltd. Vs. Commissioner of C. Ex., Pune-III - 2013 (32) S.T.R. 427 (Tri. - Mum.) in support of his contentions.
3. Per contra, Ld. AR supported the findings of the lower authorities.
4. We have heard the rival contentions, perused the documents placed on record and have gone through the decisions relied on by the Ld. Advocate.
5. The only issue to be decided is whether the reimbursement of electricity charges at 2% extra, is a taxable entity or not. The undisputed facts are that the appellant is engaged in providing services of Renting of Immovable Property; Renting of Immovable Property is chargeable to service tax. The appellant is paying appropriate service tax in respect of rent received from its tenants and that the appellant is being reimbursed at 2% extra of the Electricity Bill generated by the State Electricity Board. We find that a similar issue has been considered and addressed to by the Mumbai Bench of the CESTAT in the case of M/s. ICC Reality (India) Pvt. Ltd. (supra) wherein, the Hon'ble Mumbai Bench has, after considering the rival contentions, ruled that electricity charges were 4 required to be paid directly to the State Board by the tenants which are specifically covered under the Tariff Heading 27 of the Central Excise Tariff Act; electricity was also covered under Schedule A Sr. No. 20 and charged to 'nil' rate of tax in view of which electricity is goods chargeable to duty under Central Excise Tariff as well as under the State Value Added Tax Act. The electricity therefore would amount to 'sale of goods' and not 'supply of service' and that even Notification No. 12/2003-ST dated 20.06.2003 exempted from service tax any value of goods supplied by service provider to service recipient.
6. The takeaway from the above is that the electricity charges paid by the appellant-assessee on behalf of its tenants could only tantamount to 'service' which cannot be brought under the purview of service tax. Going therefore by the ratio decidendi of the above case, we are of the view that the Order of the lower authorities is not sustainable for which reason we set aside the same and allow the appeal with consequential benefits, if any, as per law.
(Operative part of the order was pronounced in open Court) (P Dinesha) (Madhu Mohan Damodhar) Member (Judicial) Member (Technical) Sdd