Custom, Excise & Service Tax Tribunal
Promags vs Cst Ch - Ii on 29 October, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Service Tax Appeal No. 42319 of 2014
(Arising out of Order-in-Appeal No. 200/2014(MST) dated 23.07.2014 passed by
Commissioner of Customs, Central Excise & Service Tax (Appeals), No. 26/1, Mahatma Gandhi
Marg, Nungambakkam, Chennai - 600 034)
With
Service Tax Appeal No. 40453 of 2015
(Arising out of Order-in-Appeal No. 02/2014(MST) dated 01.12.2014 passed by Commissioner
of Central Excise (Appeals-II), No. 26/1, Mahatma Gandhi Marg, Nungambakkam, Chennai -
600 034)
With
Service Tax Appeal No. 42292 of 2015
(Arising out of Order-in-Appeal No. 172/2015(STA-II) dated 03.08.2015 passed by
Commissioner of Service Tax (Appeals-II), No. 26/1, Mahatma Gandhi Marg, Nungambakkam,
Chennai - 600 034)
With
Service Tax Appeal No. 42329 of 2015
(Arising out of Order-in-Appeal No. 186/2015(STA-II) dated 06.08.2015 passed by
Commissioner of Service Tax (Appeals-II), No. 26/1, Mahatma Gandhi Marg, Nungambakkam,
Chennai - 600 034)
With
Service Tax Appeal No. 41717 of 2016
(Arising out of Order-in-Appeal No. 75/2016(STA-II) dated 14.06.2016 passed by
Commissioner of Service Tax (Appeals-II), Newry Towers, 3rd Floor, Plot No. 2054, I Block, II
Avenue, Anna Nagar, Chennai - 600 040)
And
Service Tax Appeal Nos. 41569 to 41572 of 2017
(Arising out of Order-in-Appeal Nos. 78-81/2017(STA-II) dated 10.03.2017 passed by
Commissioner of Service Tax (Appeals-II), Newry Towers, 3rd Floor, Plot No. 2054, I Block, II
Avenue, Anna Nagar, Chennai - 600 040)
M/s. Promags ...Appellant
New No. 187, Habibullah Road,
T. Nagar,
Chennai - 600 017.
Versus
Commissioner of GST and Central Excise ...Respondent
Chennai Outer Commissionerate,
Newry Towers, No. 2054-I,
2nd Avenue, 12th Main Road,
Anna Nagar,
Chennai - 600 040.
2
ST/42319/2014
ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
APPEARANCE:
For the Appellant : Ms. Radhika Chandrasekar, Advocate
For the Respondent : Mr. M. Selvakumar, Authorised Representative
CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER Nos. 41184-41192 / 2025
DATE OF HEARING : 01.08.2025
DATE OF DECISION : 29.10.2025
Per Mr. VASA SESHAGIRI RAO
These Nine Service Tax Appeals as tabulated
below, are preferred by the appellant M/s. Promags, Chennai
involving commonality of law and facts, and as there is also
an allegation of overlapping demands for various services
provided and therefore are thus clubbed together for decision
by this common order.
Sl. CESTAT Issue Period Amount (Rs) OIA OIO No SCN/SOD
No. Appeal No No/date /Date No/date
1 ST/42319/14 MMR& April 2004 to24,93,989/- 200/2014dt 100/2010 29/09 dt
BAS March 2008 (Rs.18,49,747 23.07.2014 dt 26.08.2009
April 2008-toapprtd) & Rs 31.08.2010
March 2009 2,96,055
Rs 2,27,849 &
1,31,435
2 ST/42329/15 Security Oct 2004 to 6,11,003 186/2015 148/2011 284/2010
Agency Sept 2009 dt dt dt
Service 06.08.2015 14.12.2011 20.04.2010
3 ST/41717/16 Various April 2011 to 5,54,980/- Tax 75/2016 60/2015- SOD No
services March 2012 Rs.55,498 (STA-II) dt 16 dt 66/2013 dt
prior to Penalty 14.06.2016 22.01.2016 21.04.2009
1.7.2012
4 ST/40453/15 MMR & April 2009- Rs.1,50,895/- 02/2014 dt 13/2011 dt 55/2010 dt
BAS March 2010 under MMR 01.12.2014 08.02.2011 16.09.2010
and Rs
77,047/- under
BAS
5 ST/42292/15 MMR & 1.4.2010 to Rs.3,55,214/- 172/2015dt 75/2013dt 316/2011dt
BAS 31.03.2011 under MMR Rs 03.08.2015 31.03.2013 09.09.2011
3
ST/42319/2014
ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
1,83,00 BAS
6 ST/41569 to i)MMR i)April 2012 i)Rs 2,69,858 78- 7 to SOD
41572/17 ii)MMR to June ii)Rs.1,35,896/- 81/2017dt 10/2016dt 23/2014dt
(4 Appeals) iii)MMR 2012 iii)Rs.1,80,674/- 10.03.2017 12.08.2016 16.05.2014
iv)MMR ii)July 2012 iv)Rs.11,170 ii) SCN
to March 19/2004 dt
2013 12.08.2014
iii) April iii)SOD
2013 to 05/2015dt
March 2014 25.03.2015
iv) April iv) SOD
2014 to 12/2015 dt
March 2015 12.08.2015
PROMAGS: 9 CESTAT APPEALS - 9 OIA- 9 OIO - 5 SCNs AND 4 SOD 'S
MMR indicates Management, Maintenance and Repair
Services.
BAS indicates Business Auxiliary Services.
2.1 The facts of the case as taken from the Appeal
records briefly stated are that the Appellant have provided
various services related to management, maintenance and
repair of residential and commercial complexes and facilities
attached thereto, but neither registered themselves nor paid
service tax under the category of 'Management, Maintenance
or Repair' service ('MMR service' for short). They have also
canvassed financial products like 'Home Loan' on behalf of
various financial institutions from whom they received 'Sales
Commission', but no service tax was paid under the category
of 'Business Auxiliary Service'.
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ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
2.2 On the basis of investigation conducted by the
Director General of Central Excise Intelligence, it was
proposed to demand service tax amounting to
Rs.24,93,989/- and Rs.2,27,849/- on MMR Service covering
the period (rom 16.06.2005 to 31.03.2009; and to demand
service tax of Rs.2,96,055/- and Rs.1,31,435/- under BAS
service for the financial years 2004-05 to 2008-09 vide two
SCN's 16/2009 dated 21.04.2009 and 29/2009 dated
26.08.2009 (Further period).
2.3 After due process of law, the Adjudicating
Authority have confirmed the demands as proposed, charged
interest thereon, and also imposed penalties under Section
78 and 76 of the Finance Act, 1994 (FA for short).
2.4 Being aggrieved of the above Order, the
Appellant filed an Appeal before the Commissioner of Central
Excise (Appeals), Chennai who upheld the Order in original
vide Order-in-Appeal No. 200/2014 (MST) dated 23.07.2014.
2.5 Once again being aggrieved by the above order,
the Appellant come before this forum under Appeal Nos.
ST/42319/2014 and ST/40453/2015.
5
ST/42319/2014
ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
3.1 Similarly in another case, involving extended
period on security agency service, noticed during the Audit
by the officers of Service Tax Commissionerate. Chennai it
was found that the appellant had collected Rs.51,59,952/-
from the clients towards security/cleaning service: provided
by them during period from October, 2004 to September,
2009 but had not paid service tax thereon amounting to Rs
6,11,003 Hence, a Show Cause Notice No. 284/2010 dated
20.04.2010 was issued to them. The learned adjudicating
authority after due process of law passed the Order-in-
Original No. 148/2011 dated 14.12.2011 (i) confirming the
demand of service tax under Section 73 of the Act (ii) along
with appropriate interest under Section 75 the Act and (iii)
imposed penalties under Section 77 & 78 of the Act.
3.2 When the appellant filed an appeal before the
Commissioner (Appeals II), Chennai after due process of Law
upheld the Order-in Original.
3.3 Once again aggrieved, the Appellant approached
this Tribunal in Appeal vide Service Tax Appeal No
ST/42329/15.
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ST/42319/2014
ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
4. Subsequently involving the same issues, the
Department issued periodical SCN's/SOD's demanding
service tax along with applicable interest and proposals for
imposition of penalties. After due process of law, the
respective adjudicating authorities confirmed the demands of
service tax along with interest and imposed penalties.
Aggrieved by these orders in original, the appellant preferred
appeals before the concerned Appellate Authorities, who
have however rejected the appeals and upheld the impugned
orders in original. Aggrieved, and dissatisfied with these
orders in appeal, the appellants have preferred the appeals
as tabulated supra and are now before this Tribunal.
To sum up, various Appeals have been filed by M/s. Promags
("hereinafter referred to as Appellant") assailing the Orders-
in-Appeal ("hereinafter referred to as Impugned Orders") as
detailed in the Table supra.
5. The Ld. Advocate Ms. Radhika Chandrasekar,
appeared on behalf of the Appellants and submitted as
follows: -
5.1 The Appellant has entered into different
agreements with a number of flat owners' associations in
Chennai to provide cleaning services, gardening and security
services and from 01.01.2008 the Appellant registered with
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ST/41717/2016
ST/41569-41572/2017
the Service Tax department under 'Security Agency services'
and 'Cleaning Services' and started discharging service tax
liabilities excluding the electricity charges paid and
reimbursed by the flat owners.
Apart from this the Appellant also provides information about
the financial products of the banks to the customers of bank
and does pre-disbursement and post-disbursement
documentation for the customers in relation to the
disbursement of loans.
5.2 Thus, the Department issued various SCN's for
the period from 2004-05 to 2014-15 proposing to demand
Service Tax under: -
a) Management, Maintenance and Repair services
lor alleged maintenance of immovable property with
respect to the security, cleaning and gardening
services.
b) With respect to SCN No.284/2010 dated 20.04.2010
which proposed to demand Service Tax under Security
Agency Services for the period from October 2004 to
September 2009.
c) Business Auxiliary Services for promotion and
marketing of various financial products of financial
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ST/41717/2016
ST/41569-41572/2017
institutions including banks along with levy of Interest
and Penalty
5.3 The Appellant contending on merits submitted
that they have provided security and cleaning services and
have discharged service tax, excluding the electricity
charges paid by them and reimbursed by the flat owners.
With respect to the demand under BAS the Appellant
contended that facilitating the purchase of financial product
of bank cannot be construed as an act of promoting the
business of the bank and that the activity takes place only
when the customers intend to buy the financial product and
the bank agrees to provide the product on satisfaction of
conditions.
5.4 The appellant has submitted that the SCN was
barred by limitation (wherever extended period invoked) and
that there was no reason for the department to invoke
extended period of limitation since there is no suppression or
fraud or any other ingredient mentioned in the Section.
5.5 For the period 2006-07 and 2007-08 the
Appellant had paid service tax under Security Agency
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ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
Services and Cleaning services a sum of Rs.16,38,056/along
with interest of Rs.2,11,691/- prior to the issuance of SCN
5.6 From 2008 onwards the Appellant has been
discharging service tax and the Show Cause Notices have
been issued demanding Service Tax on the electricity
charges paid by the Appellant and reimbursed by the flat
owners which needs to be excluded, as reimbursements are
not taxable.
5.7 The Adjudicating Authorities have confirmed the
demand along with interest and penalty on the ground that
the services are classifiable under Management, Maintenance
and Repair Services and that the Appellant is liable to pay
service tax on electrical charges and is liable to pay service
tax under BAS for the amounts received from banks and that
extended period is invocable (wherever the Show Cause
Notices have been invoked).
5.8 With respect to SCN No. 284/2010 dated
20.04.2010 (ST/42329/2015) where the demand is under
Security Agency Service, the demand overlaps with the
demand in SCN No. 16/2009 dated 21.04.2009, SCN No.
29/2009 dated 26.08.2009 and SCN No. 55/2010 dated
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ST/41717/2016
ST/41569-41572/2017
16.09.2010 where the service of security service, gardening
and cleaning service were grouped under a single category of
service i.e. Management Maintenance and Repairs Services.
It is trite is law that there cannot be two SCNs for the same
period and for the same service. Reliance is placed on CCE
vs. India Thermit Corporation 2008 (226) E.L.T. 164 (S.C.)
5.9 That in relation to the commission received from
the banks, it is submitted that the Appellant provided
information about financial products to banks customers
when they approached it. The Appellant also provided pre-
disbursement and post-disbursement documentation to its
customers in relation to loans. Therefore, there cannot be a
liability under BAS.
5.10 Facilitating purchase of financial products of
bank cannot be construed as an act of promoting the
business of the bank so the demand under BAS is incorrect.
The transaction takes place only after the customers intend
to purchase financial products and the bank gives a
concurrence to provide the product. The activity initially is
only between the bank and the customer.
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ST/41717/2016
ST/41569-41572/2017
5.11 Extended period is not invocable as none of the
ingredients that are required for invoking the extended
period are present.
5.12 The Appellant also seeks for the benefit of
Section 80 of the Finance Act as amended which provides
that notwithstanding anything contained in the provision of
Section 76, Section 77 or Section 78 no penalty shall be
imposed if there is reasonable cause for the failure to pay
tax.
5.13 Further, the Appellant had submitted about their
contention before the Adjudicating Authority as well as the
First Appellate Authority that SCNs were issued for the very
same period earlier and therefore by invoking the extended
period another SCN for the very same period cannot be
issued.
6. The Ld. Authorized Representative Shri M.
Selvakumar argued on behalf of the Respondent and
supported the findings in the impugned orders. With regard
to the issue of limitation, the Ld. AR submitted that the short
payment or short reversal would not have come to light but
for the investigation carried out by the Department. He has
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ST/41717/2016
ST/41569-41572/2017
drawn our attention to Para 9(ii) Pg. 23 in respect of
ST/42329/2015 where the Commissioner (Appeals) has held
that the SCNs issued earlier were different and not on
Security Services but regarding the non-payment of Service
Tax on BAS. Therefore, the appellant is guilty of suppression
of facts with an intent to evade payment of duty and justified
invoking extended period. Finally, he submitted that there
are no grounds for interference in the impugned order.
7. We have Heard both sides. Perused the appeal
records as well as the case laws relied upon.
8. We now take up the issues one by one
8.1 It is essential first to look into the definitions of
the Services discussed in the Impugned orders as follows: -
A. Management, Maintenance and Repair Service:
Section 65 (64) "management, maintenance or repair" means
any service provided by--
(i) any person under a contract or an agreement; or
(ii) a manufacturer or any person authorised by him, in
relation to,--
(a) management of properties, whether immovable or not;
(b) maintenance or repair of properties, whether immovable
or not; or
(c) maintenance or repair including reconditioning or
restoration, or servicing of any goods, excluding a motor
vehicle;]
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['Explanation. -- For the removal of doubts, it is hereby
declared that for the purposes of this clause, --
(a) "goods" includes computer software;
(b) "properties" includes information technology software
B. Section 65 (19) "business auxiliary service" means
any service in relation to, --
i. promotion or marketing or sale of goods produced or
provided by or belonging to the client; or
ii. promotion or marketing of service provided by the
client; or 2[****]
iii. any customer care service provided on behalf of the
client; or
iv. procurement of goods or services, which are inputs for
the client; or [Explanation. -- For the removal of
doubts, it is hereby declared that for the purposes of
this sub-clause, "inputs" means all goods or services
intended for use by the client;]
[v. production or processing of goods for, or on behalf of the
client; or]
vi. provision of service on behalf of the client; or
vii. a service incidental or auxiliary to any activity specified
in sub-clauses (i) to (vi), such as billing, issue or collection or
recovery of cheques, payments, maintenance of accounts and
remittance, inventory management, evaluation or
development of prospective customer or vendor, public
relation services, management or supervision, and includes
services as a commission agent, 5[but does not include any
activity that amounts to "manufacture" of excisable goods.]
[Explanation. -- For the removal of doubts, it is hereby
declared that for the purposes of this clause, --
(a)" commission agent" means any person who acts on behalf
of another person and causes sale or purchase of goods, or
provision or receipt of services, for a consideration, and
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includes any person who, while acting on behalf of another
person --
(i) deals with goods or services or documents of title to such
goods or services; or (ii) collects payment of sale price of
such goods or services; or
(iii) guarantees for collection or payment for such goods or
services; or
(iv) undertakes any activities relating to such sale or purchase
of such goods or services;
[(b) (c) excisable goods" has the meaning assigned to it in
clause (d) of section 2 of the Central Excise Act, 1944(1 of
1944); "manufacture" has the meaning assigned to it in
clause (f) of section 2 of the Central Excise Act, 1944(1 of
1944)]
C. Section 65(94) "security agency" means any 2[person]
engaged in the business of rendering services relating to the
security of any property, whether movable or immovable or
of any person, in any manner and includes the services of
investigation, detection or verification, of any fact or activity,
whether of a personal nature or otherwise, including the
services of providing security personnel;
From the internet definition, we find that an apartment
maintenance is bundled service is a single, comprehensive
package of services provided to upkeep a residential property,
covering everything from cleaning and security to repairs,
landscaping, and utility management. These bundled services,
often part of housing society maintenance fees, are priced
based on factors like property size or the number of facilities
offered, with the goal of reducing costs, improving tenant
satisfaction, and increasing property value.
What is included in bundled maintenance services?
These services are designed to maintain the safety, comfort,
and aesthetic appeal of a residential property. They typically
include:
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Cleaning and Housekeeping: Maintaining the cleanliness of
common areas within the apartment complex.
Security: Providing security services for the entire property.
Landscaping: Upkeep of the grounds and common green
spaces.
Repairs: Addressing issues with common facilities like lobby
lighting and elevators.
Utility Management: Handling common utilities and
ensuring their proper operation.
How are bundled services priced?
The cost of these services varies but is generally based on:
Property Size: Larger properties or units typically incur
higher fees.
Facilities and Amenities: Societies offering more luxurious
facilities will have higher maintenance charges.
Hybrid Systems: Some complexes combine a per-square-
foot fee with a flat rate for shared services like lifts and
parking.
Benefits of bundled maintenance services
Cost Efficiency:
A bundled service can be more cost-effective than managing
each aspect separately.
Improved Tenant Satisfaction:
A well-maintained property leads to a better living experience
for residents.
Increased Property Value:
Regular upkeep helps to maintain and increase the overall
value of the property.
Comprehensive Coverage:
Residents receive a wide range of essential services through a
single fee, simplifying management and upkeep.
8.2 We now take up all the Appeals as mentioned in
the Table in first Para at Page 2, for decision in seriatim: -
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9. APPEAL No. ST/42319/14
This Appeal is covered by Two SCN's one issued invoking the
extended period for the period June 2005 to March 2008 and
proposing penalty under Section 76 and 78 of FA 1994. In
the second SCN, the period is from April 2008 to March 2009
and penalty under Section 76 and 77 of FA was proposed.
9.1 The Appellant has submitted that: -
i. The demand was confirmed under Management,
Maintenance and Repair services as proposed in SCN
and upheld by the impugned Order, allowing
reimbursement of electricity charges and confirmed the
demand under Business Auxiliary services on the Direct
Selling agent Commission
ii. The Commissioner of Customs, Central Excise & Service
Tax (Appeals) in Para 8 rightly observed that charges
paid for electricity consumption in units to EB was not
taxable since the same was reimbursed to the Appellant
by their clients. He has also observed in Para No. 8 of
the Order-in-Appeal that to that extent the taxable
value is to be reduced. However, in Para No. 12, the
Commissioner (Appeals) failed to mention the same
and simply upheld the Order-in-Original dated
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31.08.2010. On this count the Order-in-Appeal is
erroneous and not maintainable
iii. The Demand is hit by limitation of time as the
ingredients set out in Section 73 of FA 1994 to invoke
extended period are not existing in this case and cited
several case Laws in their favour.
iv. As regards BAS, a taxable service has to be provided to
a client by any person in relation to business auxiliary
services. There is no service provider- client
relationship between Appellant and the bank and hence
the definition of 'taxable service' itself is not applicable.
9.2 We find from the SCN, the Managing partner has
furnished the details of receipt of income from the
maintenance of complexes month wise and year wise after
giving abatement for expenditure incurred towards electricity
charges
The SCN alleged that there was no provision to deduct
expenditure toward TNEB charges and computed the service
tax on gross amounts received.
9.3 We find that though levy of service tax on
maintenance of Immovable property came into effect from
16.05.2005, the Appellant has registered themselves with
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the Service Tax Commissionerate, Chennai only in the month
of January 2008 though they were in receipt of consideration
for rendering such services even prior to 'the period of
registration.
9.4 We also find that Shri Vijai Kumar, Managing
Partner admitted the lapse and paid service tax voluntarily
for the period from May 2006 to March 2008 along with
interest and intimated the same in their letter dated
24/6/2008, and he stated inter-alia that they had not paid
the service tax for the period shown but he undertook to
discharge the appropriate service tax soon.
9.5 The Appellant was appointed as Business
Associates by various financial institutions by way of entering
into agreements and are also rendering services to their
clients on their behalf and are receiving amount and
accounting the same as Commission in their books of
accounts. But, it is found that applicable service tax was not
paid.
9.6 We find that the Appellant on his own accord
furnished the details of income from maintenance of
complexes. We have perused the Order-in-Original and the
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impugned order where the classification of services rendered
was done under MMR Services (Immovable property
services). The Appellant has already paid Tax and Interest
for part of the period in dispute. The Department has added
electricity charges and computed the tax demand. We find
the Impugned order in Para 8 of his impugned order has held
that
"...................... The electricity charges paid by the Appellant
and reimbursed by their clients shall be out of the purview
of service tax. In respect of electricity units consumed in
common area i.e. staircase, lobby, etc., it is opined that
the residents shared the charges equally among
themselves on pro-rata basis and paid to the electricity
Board. Therefore, such charges attributable to
consumption of electricity units and paid into Electricity
Board were not taxable as service provided by the
Appellant. To that extent the taxable value is reducible.
However, in the operative portion of his order, the LAA has
upheld the Order-in-Original which in our view is an apparent
mistake while concluding the Order. However, we do not go
into the issue once again as it has been already held after
detailed discussion and analysis that the electricity charges
are not includible. We set aside the order of the Lower
Appellate Authority in this Regard and Allow the Appeal on
the exclusion of electricity charges as claimed by the
Appellant. However, this exercise requires Arithmetical
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calculations and in the absence of the same in the Appeal
records, we are unable to do so. We remand this portion of
the order for taking intO the observation of the LAA in the
impugned order and re-compute the demand.
9.7 We find that the demand of service lax on sales
commission under the category of BAS service, is
unambiguously clear that commission paid to sales agents is
taxable under the category of BAS. This aspect has been
discussed in detail in the Impugned Order .The expenses
incurred for procuring viable clients cannot be adjusted
against the consideration, treating part of the commission as
'reimbursements of expenses'. There was no obligation on
the financial institutions to pay salary and other expenses for
the staff of the Appellant. On the contrary, the salary and
other expenses are to be borne by the Appellant and 'sales
commission' paid was the sole and gross Consideration for
procuring clients. It is settled law that cost of providing a
taxable service cannot be excluded as 'reimbursement' of
expenses from the ambit of taxable value. Service tax is
chargeable on gross amount received as consideration for
providing the service. In this regard, reliance is placed on the
ratio of the following decision: -
"Sri Bhagavathy Traders vs Commissioner of Central
Excise, Cochin [2011 (24) S.T.R. 290 (Tri-LB)]-
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6.1 Having analyzed the various decisions cited on behalf of the
assessee and on behalf of the department, it would be
appropriate to consider the scope of the term "reimbursements"
in the context of money realized by a service provider. A person
selling the goods to another cannot treat cost of raw materials or
the cost of labour or other cost components for inputs services,
which went into the manufacture of the said goods as
reimbursements. If the buyer enters into a contract for supply of
raw materials after negotiating prices from the supplier for the
raw materials and the raw materials are received by the
manufacturer and the manufacturer pays the amounts to the
supplier of raw materials and recovers the same from the buyer,
it can certainly be considered as reimbursements. It is to be
noted that in such a case, the manufacturer has no role about
choosing the source of the materials procured or the price at
which the materials procured and the manufacturer is not under
any legal or contractual obligation to pay the amount to the
supplier. However, if the manufacturer procures raw materials
from a source of his choice at a price negotiated between him
and supplier of the raw materials and uses the material for
manufacture of the final products which he sells, the question of
his collecting the cost of raw materials as reimbursement does
not arise. The concept of reimbursement will arise only when the
person actually paying was under no obligation to pay the
amount and he pays the amount on behalf of the buyer of the
goods and recovers the said amount from the buyer of the
goods.
6.2 Similar is the situation in the transaction between a service
provider and the service recipient. Only when the service
recipient has an obligation legal or contractual to pay certain
amount to any third party and the said amount is paid by the
service provider on behalf of the service recipient, the question
of reimbursing the expenses incurred on behalf of the recipient
shall arise. For example, when rent for premises is sought to be
claimed as reimbursement, it has to be seen whether there is an
agreement between the landlord of the premises and the service
recipient and, therefore, the service recipient is under obligation
for paying the rent to the landlord and that the service provider
has paid the said amount on behalf of the recipient. The claim
for reimbursement of salary to staff, similarly has to be
considered as to whether the staff were actually employed by
the service recipient at agreed wages and the service recipient
was under obligation to pay the salary and it was out of
expediency, the provider paid the same and sought
reimbursement from the service recipient."
9.8 When Sri Vijai Kumar, partner was, enquired, he
in his statement dated 10/06/2008 deposed inter alia that he
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was not aware of the provisions and hence not paid service
tax so far and that he would pay service tax In respect of
such Income received for rendering such services to the
banks.
9.9.1 In the case of Sisodia Associates Versus C.C.E. &
S.T. -Jaipur-ii 2018 (7) TMI 1441 - CESTAT NEW DELHI we
find that Business Auxiliary Service - appellant is engaged in
providing D.S.A. Service to M/s ICICI HFC Ltd. For promotion
of their loans and received Commission - Held that:- The
issue stands settled against the assessee on merit. In the
case of Brij Motors Pvt. Ltd. Vs. Commissioner [2011 (11)
TMI 410 - CESTAT, NEW DELHI] the Tribunal held that for
the loan taken by the customers, if the assessee is getting
some commission from bank, the same amounts to
promotion and marketing of services provided by the client
and is liable for payment of Service Tax under the category
of 'Business Auxiliary Service' - demand upheld.
9.9.2 Further we note that in the case of Addis
Marketing Versus Commissioner of Central Excise, Mumbai
2016 (11) TMI 19 - CESTAT MUMBAI it had been held that: -
"6. We find that as regard the admissibility of the services of
promotion and marketing loans and finances on behalf of the
bank and non banking financial institution in various judgments
cited by the Ld. Counsel, the Larger Bench of this tribunal as well
as Board Circular dated 16/11/2006 it has been settled that
service provided by the appellant to HDFC bank is classifiable
as Business Auxiliary Services and liable for service tax."
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9.10 We find in Para 34.2 of the OIO it has been
abstracted that as per the General Clause of the agreement,
the sourcing fee is inclusive of the service tax and all related
charges and levies thereon. The Associate shall bear and pay
the service tax and the related dues/ levies as may be found
payable.
9.11 We find from the statement given by Shri Vijai
Kumar, wherein he inter-alia, stated that their services
rendered to the Bank was covered within the said provision;
that he was not aware of the provisions and he did not pay
service tax so far but would pay service tax in respect
income received for rendering such services to the banks. He
has admitted the liability to Tax under BAS.
9.12 In view of the above findings, we have no
hesitation in holding that the Commission received from
Banks and Financial Institutions are rightly classified under
BAS in the impugned order and we uphold the decision.
9.13 Limitation and penalty - The Appellant contended
that extended period is not invocable. None of the
ingredients that are required for invoking the extended
period are present. The Appellant relies upon the following
decisions wherein it has been held that the expression
'suppression' has been used in the proviso to Section 11A of
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the Act accompanied by very strong words as 'fraud' or
'collusion' and therefore has to be construed strictly. It has
also been held that when a notice is issued for subsequent
period for the same issue, extended period cannot be
invoked as the department is already aware of the details.
The Appellant placed reliance on the following case Laws:
i. M/s. Continental Foundation Joint Venture Vs. CCE (2007) 216
ELT177
ii. Pushpam Pharmaceuticals Company Vs Collector of C.Ex.
Bombay (1995) 78 ELT401
iii. Collector of Central Excise Vs. Chemiphar Drugs & Liniments Ltd
(2002) TIOL 266
iv. Nizam Sugar Factory Vs Collector of Central Excise (2006)
197ELT465(SC)
v. ECE Industries Ltd vs. CCE (2004) 164 ELT236
We find that the issue has been extensively dealt with in the
Order-in-Original in Paras 42, 42.1 and 43 which read as
follows: -
"42.0 Where ST-3 Return the value of was less than the amount
actually collected by the assessee and. assessee was not able to
substantiate with documentary evidence. that the value
disclosed in the return was the correct amount, the department
would be justified in invoking the extended period fe initiating
proceedings for recovery of tax, - Insurance and pr Department
Vs CE reported in 2007 (10) STT 502 (CESTAT - Delhi).
42.1 As regards the question whether the extended time limit
under the proviso to Section 73(1) of the Finance Act, 1994 is to
be invoked for demand of service tax, I have examined the
arguments put forth by them. It is on verification by the
department, the fact of provision of several services by them
without payment of service tax came to light. Similarly, merely
because they have obtained registration for Security Service and
Cleaning Service earlier will not automatically lead to a
conclusion that there is no service tax liability on other services
which are provided by them, unless they come forward to
intimate the department or seek clarification from the
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department about such activity. The assessee are bound to
examine the service tax liability soon after the imposition of levy
of service tax on such activity. Thus, it is clear that the assessee
did not obtain registration for the services namely Management,
maintenance and Repair service rendered from 16.06.2005 to
31.03.2009, nor paid any service tax on the gross amount
received by them from the respective flat owners' association.
The facts have come to the notice of the Department only after
the detailed investigation conducted by the officers of the
Directorate General of Central Excise Intelligence, Chennai Zone
with regard to their financial records. I, therefore, hold that the
assessee have suppressed the vital information with intent to
evade payment of service tax and accordingly invoking of
extended time limit under the proviso to Section 73(1) of the
Act, is justifiable.
43. As regards the question whether the assessee are liable for
penal action as proposed in the show cause notice, in view of the
observations made above, it has been held that the assessee
have suppressed the facts of non-payment of service tax on the
charges collected towards maintenance and repair of goods or
things in the building/complex occupied by their tenants, and
therefore, the argument that the case of interpretational issue
does not hold water. In view of the same I am not inclined to
accept the argument of the assessee that penalty under Section
76 and 78 of the Act, is not to be invoked as there is no
reasonable cause for the non-payment o! service tax as
envisaged in Section 80 of the Finance Act, 1994. Thus, once it
is held that the assessee has suppressed the facts with intention
to evade payment of service tax, penalty under Section 78 of the
Finance Act, 1994 would be automatic and gets attracted. In this
connection, I rely upon the decision of the Hon'ble Supreme
Court in the case of Dharmendra Textile Mills and Rajasthan
Spinning & Weaving Mills. As regards the proposal for penalty
under Section 76, I am of the opinion that the imposition of
penalty under Section 78 would itself meet the ends of justice
and, therefore, penalizing them under Section 76 may not be
warranted further in respect of the demands made in the Show
Cause Notice No. 16/2009 dated 21.04.2009. However, I impose
appropriate penalty under Section 76 of the Finance Act, 1994 in
respect of the demands made vide Show Cause Notice
No.29/2009 dated 26.08.2009. Promags are also liable for
penalty under Section 77 of the Finance Act, 1994, inasmuch as
read with Section 91 & 95 of the Finance (No.2) Act, 2004 and
Section 136 & 140 of the Finance Act, 2007, for their failure to
register with the department and failure to furnish the prescribed
return in and for suppressing value and furnishing false details in
ST-3 returns and for their failure to pay service tax and
educational cess by suppression of facts; Promags are liable to
pay interest under Section 75 of the finance Act, 1994 on the
service tax not paid / short-paid o the due dates inasmuch as
charging of interest on such case is automatic."
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9.14 From the above findings, we see that this issue
was extensively discussed both in the Order-in-Original /
Order-in-Appeal. There is no ground to interfere with the
decision of Lower Appellate Authority.
We also find that the Managing Partner of the Appellant in
his statement dated 10.06.2008 stated inter-alia to a specific
query as to whether Promags declared to the department
about the services provided prior to the period of registration
i.e. prior to 01.01.2008, he stated that they had not
informed the department about the said services provided
prior to 01.01.2008. When the ledgers showing income
towards maintenance for the period 2006-07 and 2007-08
were shown to Sri Vijai Kumar and enquired as to why no
service tax was paid during the period, he stated inter-alia
that they had not paid the. service tax for the period shown
and that he undertook to discharge the appropriate service
tax soon.
9.15 Further we observe that Sri Vijai Kumar, Partner
admitted the lapse and paid service Tax voluntarily for the
period from May 2006 to March 2008 with interest and
intimated the same in their letter 24.06.2008. Therefore, the
fact of suppression/misstatement is also admitted by the
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Appellant on his own volition which is binding on the
Appellant/Firm.
9.16 From the findings in the OIO/OIA, we observe
that the fact of suppression of facts and misstatement of
facts was clearly established. We find that, but for the
intervention of the Department, the misclassification, Non-
payment of Service Tax would not have seen the light of the
day. The fact of Suppression is clearly established in this
case. We have gone through the impugned orders/OIO and
we have no reason to differ from the above findings and we
are in total agreement with their findings.
9.17 Further, we find that the first SCN covered in the
impugned order is issued invoking the extended period and
the second SCN was issued under Normal period only on the
same set of facts for the further period. In view of our above
findings, we have no hesitation in holding that extended
period is rightly invoked in this case and Penalties imposed
under Section 77 and 78 for the First SCN and under Section
76 for the demand covered under SECOND SCN is in order.
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9.18 Therefore, we have no hesitation in holding that
invocation of extended period and imposition of penalty as
above is justified.
9.19 The Appellant also sought for the benefit of
Section 80 of the Finance Act as amended which provides
that notwithstanding anything contained in the provision of
Section 76, Section 77 or Section 78 no penalty shall be
imposed if there is reasonable cause for the failure to pay
tax. In the instant case the Appellant has discharged service
tax under security and cleaning services.
9.20 According to Section 80 no penalty may be
imposed under Section 76, 77 or 78(1) of the Act if the
assessee is able to prove that there is reasonable cause for
such failure. In Para 2.4, we find that
"2.4 The Appellant/ M/S Promags entered Into
Memorandum of Agreement dated 30/10/2005 for
operation and Maintenance with M/S Jalns Avanthlka Flat
owner's Association (Annexurø A-5) wherein M/s Promags
agreed to perform the following activities (a) security to
the building, (b) Housekeeping of the building, (c)
Electrical Services, (d) plumbing Services, (e) Gardening,
(f) Operation of the sewage treatment plant and
swimming pool and (g) Preventive maintenance of lifts,
plant and machinery. M/S Jalns Avantika Flat Owners
Association agreed to pay Rs 0.93 paise per sq ft for a total
area of Rs 1,42,437 Sq Ft inclusive of service Tax. The
Appellant paid the Tax belatedly in 2008 only after the
intervention of the Department and Obtained ST
Registration under cleaning and security services only on
1.1.2008. This shows their deliberate intent to register and
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avoid payment of tax though they were aware of the Tax
liability as can be seen from the above MOA.
Under these circumstances, we do find any reasonable
cause for their failure and we are not inclined to consider
their request. Their request under Section 80 of FA 1994 is
rejected."
9.21 To sum it up, we remand the impugned order to
the LAA for the limited purpose of computing the Tax after
deducting the reimbursed expenses on account of electricity
charges and pass a reasoned order after following the
principles of natural justice.
9.22 This Appeal is disposed of with above directions.
10. APPEAL No. ST/42329/2015
10.1 The Brief facts of the case are that the appellant
a service provider registered for "Security service', and
'Cleaning service". During audit by the officers of Service Tax
Commissionerate. Chennai it was noticed that the appellant
had collected Rs.51,59,952/- from the clients towards
security/cleaning service: provided by them during period
from October, 2004 to September,2009 but had not paid
service tax thereon amounting to Rs 6,11,003/- Hence, Show
Cause Notice was issued to them. The learned adjudicating
authority after due process of law passed the impugned
order (i) confirming the demand of service tax under Section
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73 of the Act (ii) along with appropriate interest under
Section 75 the Act and (iii) imposing a penalty under Section
77 & 78 of the Act.
10.2 Aggrieved by the impugned order: the appellant
filed this appeal before the Commissioner (Appeals) Chennai.
The Commissioner (Appeals) Chennai after due process of
Law upheld the OIO on merits and rejected Appeal on the
grounds of time bar in filing the Appeal.
10.3 Once again, aggrieved, the Appellant filed this
Appeal before this Tribunal.
10.4 The Ld. Advocate Ms. Radhika Chandrasekhar
appeared for the Appellant and the Ld. Authorized
Representative Mr. M. Selvakumar Appeared for the
Respondent/Department.
10.5 The Ld. Counsel for the Appellant submitted as
follows: -
i. In Show Cause Notice No. 284/2010 dated 20.04.2010
(ST/42329/15) the department proposed to demand
Service Tax under 'Security Agency Services' for the
period from October 2004 to September 2009 though it
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was already considered as a part of a composite service
of Management Maintenance and Repairs and
demanded under different SCNs issued.
ii. It is relevant to state that for the period of dispute in
SCN No. 284/2010 dated 20.04.2010 (ST/42329/15),
the Appellant has discharged service tax for security
service and cleaning service except on the reimbursed
electricity charges, which has been accepted by the
department in the orders. In the first Show Cause
Notice (SCN No. 16/2009 dated 21.04.200), Para 5.1 in
Page 138 of ST/42319/14 it is clearly mentioned that
the ledgers. P&L. from EY2004-05 have been
scrutinized and agreement clauses have also been
extracted. Therefore, the same issue cannot be
reagitated through another proceeding as it is against
the principle of Res-Judicata.
iii. The Ld. Advocate further has contended before the
Adjudicating Authority as well as the First Appellate
Authority (Para 9(i) Pg. 23 ST/42329/2015) that SCNs
were issued for the very same period earlier and
therefore by invoking the extended period another SCN
for the very same period cannot be issued.
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iv. Extended period is not invocable as none of the
ingredients that are required for invoking the extended
period are present. The Appellant relies upon the
several decisions wherein it has been held that the
expression 'suppression' has been used in the proviso
to Section 11A of the Act accompanied by very strong
words as 'fraud' or 'collusion' and therefore has to be
construed strictly. It has also been held that when a
notice is issued for subsequent period for the same
issue, extended period cannot be invoked as the
department is already aware of the details.
v. The Appellant also sought the benefit of Section 80 of
the Finance Act as amended which provides that
notwithstanding anything contained in the provision of
Section 76, Section 77 or Section 78 no penalty shall
be imposed if there is reasonable cause for the failure
to pay tax. In the instant case the Appellant has
discharged service tax under security and cleaning
services.
vi. With respect to SCN No.284/2010 dated 20.04.2010
(ST/42329/2015) where the demand is under Security
Agency Service, the demand overlaps with the demand
in SCN No. 16/2009 dated 21.04.2009, SCN No.
29/2009 dated 26.08.2009 and SCN No. 55/2010 dated
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16.09.2010 where the service of security service,
gardening and cleaning service were grouped under a
single category of service i.e. Management Maintenance
and Repairs Services. It is trite is law that there cannot
be two SCNs for the period and the same service.
Reliance is placed on CCE Vs. India Thermit Corporation
[2008 (226) E.L. T. 164 (S.C.)]
vii. Finally, she requested to consider the above
submissions and allow the Appeal on the grounds of
merit as well as limitation.
10.6 Per Contra, the Ld. Departmental Authorized
Representative Mr. M. Selvakumar appeared on behalf of the
Respondent and reiterated the contentions made in the
Order-in-Original and Order-in-Appeal and this is a clear case
of outright Non-payment of Tax by suppressing the facts
from the Department and extended period is invokable in
this case. With regard to the issue of limitation, Ld. AR
submitted that the short payment or short reversal would not
have come to light but for the interference of the
Department. Therefore, the appellant is guilty of suppression
of facts with an intent to evade payment of duty.
Therefore, he argued that there are no grounds for
interference in the impugned order.
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10.7 We have heard both the sides.
10.8 The following issues arise for our consideration in
this case as to: -
i. Whether the LAA has erred in holding the management,
maintenance and repair services as security agency
services resulting in overlapping demand ie whether the
demand under MMR and Security services overlap in
this case?
ii. Whether the extended period of limitation is invokable
in this case?
iii. Whether the benefit of Section 80 of FA 1994 is
available in this case?
10.9 The Appellant submitted that the impugned
Order and the Order-in-Original failed to appreciate that the
Appellant obtained registration under the category of
Security Agency Service in the month of March 2004 and
discharged service tax for the period March 2004 to August
2005, Further, the Appellant has Stopped providing security
agency service from September 2005 onwards and the books
of accounts maintained by Appellant makes it clear that
there was no credit under this category and the Orders erred
in proposing a demand of service tax on the amount of
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Rs.51,59,952/- without appreciating the nature of the
receipt.
10.10 The receipt on account of electricity is only
recovery of the electricity bills for the common facilities. The
Appellant pays the amounts and recovers these amounts
from the association. Payments and recovery of electricity
bills cannot be considered as security agency service.
10.11 That unless the revenue generated from the
transaction is for the Services rendered under the category
of Security services, there is no Liability of service tax. In the
instant case the revenue receipts are for renting the
premises for the cinema and advertising shootings, extra
work Charges etc. Therefore, the activity provided by
Appellant cannot fall within the ambit of service tax.
10.12 The Order-in-Original erred in coming to a
conclusion that the Appellant have not given any bifurcation
of the above-mentioned receipts. The Appellant is ready to
provide the necessary bifurcation whenever required.
10.13 The para 2 of the SCN makes a mention that
"2. During the course of Audit of Accounts of the assessee
by the Internal Audit Group of this Commissionerate, it
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was noticed that the assessee during the period from
October,2004 to September,2009 have received an
amount of Rs.51,59,952/- from their clients towards the
Security/ Cleaning services provided to them. However,
the assessee have not discharged the service tax on the
said service income realised. The non-payment of service
tax on the above said amount works out to Rs.6,11,003/-
as per the annexure to this notice."
10.14 We find that it has been already held that the
Appellant is rendering composite services (Para 9). From the
SCN we find that the services rendered by the Appellant are
a) security to the building, (b) Housekeeping of the building,
(c) Electrical Services, (d) plumbing Services, (e) Gardening,
(f) Operation of the sewage treatment plant and swimming
pool and (g) Preventive maintenance of lifts, plant and
machinery etc. The contract price is Rs 0.93 paise per sq ft
for a total area of Rs 1,42,437 Sq Ft inclusive of service Tax
and the Ledger and P& L Account shows receipt of income
under "Maintenance". Further the contract is a composite
one and cannot be vivisected.
Security services are already covered in our earlier order in
Appeal Nos ST/42319/14 that it is part of the composite
contract of maintenance of Apartments and the price cannot
be vivisected.
10.15 The Appellant disputed that the charges
were not Security Agency Services and that they have
documentary evidence to prove item wise charges.
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10.16 The Appellant submitted that the demand
overlaps with the demand already made under MMR Services
for which detailed submissions have been made in Appeal
ST/42319/14.
10.17 Further the Appellant submitted that in their
Appeal heard by this Tribunal ST/42319/14 that there is
overlapping demand as shown in the table below.
It is relevant to state that for the period of dispute in SCN
No. 284/2010 dated 20.04.2010 (ST/42329/15), the
Appellant has discharged service tax for security service and
cleaning service except on the reimbursed electricity
charges, which has been accepted by the department in the
orders. In the first Show Cause Notice (SCN No. 16/2009
dated 21.04.200), Para 5.1 in Page 138 of ST/42319/14 it is
clearly mentioned that the ledgers. P&L. from FY2004-05
have been scrutinized and agreement clauses have also
been extracted. Therefore, the same issue cannot be
reagitated through another proceeding as it is against the
principle of Res-Judicata. The relevant paragraphs in the
Appeals for the same period where payment made under
Security Agency Service has been discussed and considered
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as a composite service falling under 'Management
Maintenance and Repairs' a are indicated below: -
1. SCN
ST/42319/14
Paras 2.2, 2.3 & 2.4 (Pg 136-137) where
SCN No. 16/2009 dated 21.04.2009 agreement clauses wherein there is
reference to security service and various
other services are extracted
2.OIO
a)Paras 22, 22.1, 22.2, 22.3, 23, 24 (Pg 91-92)
discuss the security services provided
b)Para 33.1 (Pg 96) treats Security service as a
part of a composite service of Management
Maintenance and Repair Service
c)Para 42.1 (Pg 100) states that merely
because registration under Security Service
has been taken earlier, it will not
automatically lead to a conclusion that there
is no Service Tax liability on other services
which are provided by the Appellant
2. OIA In Para 3(iii) (Pg 37)
Para 7 (Pg 38) states that provision of services
like security service, housekeeping, etc as
provided in the agreements are within the
scope of 'Maintenance'
10.18 We have gone through the details in the above
Table and find that Security Services have been held to be
within the Scope of Maintenance and the same cannot be
taxed again which will tantamount to double taxation and is
not sustainable in law.
Further we find that Security services are already covered
and decided in our earlier Appeal No ST/42319/14 as part of
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Composite service under MMR Services and therefore this
issue need not be discussed in length once again for the sake
of repetition.
10.19 We also find that Security services have been
included in the composite service of MMR Service and
extended period has been invoked in Appeal No.
ST/42319/14. Therefore, a second demand for the same
service and same period cannot be allowed under Extended
period under the name of Security agency service which was
already covered by us in our decision in Appeal No
ST/42319/ST IN Para 9.
10.20 Further it was submitted by the Appellant that It
is trite law, that there cannot be two SCNs for the same
period and the same service and placed Reliance on CCE Vs.
India Thermit Corporation [2008 (226) E.L.T. 164 (S.C.)].
10.21 We have perused the above decision and the
same is squarely applicable in this case. Therefore, the
demand under Security Agency service is required to be set
aside being a repeated demand and being already covered
under MMR Services for the similar period.
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10.22 Further, extended period is not invocable as
none of the ingredients that are required for invoking the
extended period are present. The Appellant relied upon the
following decisions wherein it has been held that the
expression 'suppression' has been used in the proviso to
Section 11A of the Act accompanied by very strong words as
'fraud' or 'collusion' and therefore has to be construed
strictly. It has also been held that when a notice is issued for
subsequent period for the same issue, extended period
cannot be invoked as the department is already aware of all
the facts.
The Appellant has relied on several case laws in their favour.
i) M/s. Continental Foundation Joint Venture Vs. CCE
(2007) 216 ELT177
ii) Pushpam Pharmaceuticals Company Vs Collector of
C.Ex. Bombay (1995) 78 ELT 401
iii) Collector of Central Excise Vs. Chemphar Drugs &
Liniments Ltd (2002) TIOL 266
iv) Nizam Sugar Factory Vs Collector of Central Excise
(2006) 197 ELT 465 (SC)
v) ECE Industries Ltd Vs. CCE (2004) 164 ELT 236
10.23 We have perused some of the case Laws and find
that: -
"i. Nizam sugar Factory vs CCE, A.P.--- [2006 (197)
ELT 465(SC)]-
"9. Allegation of suppression of facts against the
appellant cannot be sustained. When the first SCN was
issued all the relevant facts were in the knowledge of the
authorities. Later on, while issuing the second and third
show cause notices the same/similar facts could not be
taken as suppression of facts on the part of the assessee
as these facts were already in the knowledge of the
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authorities. We agree with the view taken in the aforesaid
judgments and respectfully following the same, hold that
there was no suppression of facts on the part of the
assessee/appellant."
ii. Hyderabad Polymers (P) Ltd vs CCE, Hyderabad
[2004 (166) ELT 151 (SC)]-
"6. The Collector has given a categoric finding that the
earlier Show Cause Notice raised a demand on a similar
issue and for an identical amount. That Show Cause
Notice had been dropped. In our view the Tribunal was
wrong in still holding that there was suppression of fact or
material. This Court has in the case of ECE Industries
Limited v. Commissioner of Central Excise, New Delhi
reported in 2004 (164) E.L.T. 236 (S.C.) held as follows :-
...
On the ratio laid down in this judgment it must be held that once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier Show Cause Notice was for a subsequent period and/or it cannot be taken into consideration as it is not known when that Show Cause Notice was dropped. If the Department wanted to take up such contentions it is for them to show that that Show Cause Notice was not relevant and was not applicable. The Department has not brought any of those facts on record. Therefore, the Department cannot now urge that findings of the Collector that that Show Cause Notice was on a similar issue and for an identical amount is not correct."
10.24 It is clear from the above case Laws that once a demand has been issued on the same grounds invoking extended period of limitation, then issuing second demand on the same set of facts is not maintainable. We have perused the aforesaid case Laws, and the ratio decidendi of the above decisions are squarely applicable in this case and we respectfully follow the same.
42
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 10.25 Therefore, we hold that the demand issued in this case is hit by limitation of time, and also on the fact that as it overlaps with the demand made under MMR service, the demand under Security agency service fails to survive on merits as well as limitation. We set aside the impugned order and allow the Appeal with consequential benefits as per Law. 11.1 Appeal Nos. ST/40453/15 & ST/42292/15 are filed by the Appellant against the impugned orders passed by Commissioner (Appeals) Chennai for including reimbursement of electricity charges in MMR Services and against the taxability of services rendered to Banks and Financial Institutions under BAS Services. 11.2 It is not disputed that the Appellant provided various services related to management, maintenance and repair of residential and commercial complexes and facilities attached thereto, but neither registered themselves nor paid service tax under the category of 'Management, Maintenance or Repair' service ('MMR service' for short). They also canvassed financial products like 'Home Loan' on behalf of various financial institutions from whom they received 'Sales 43 ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 Commission', but no service tax was paid under the category of 'Business Auxiliary Service'.
11.3 On the basis of investigation conducted by the Director General of Central Excise Intelligence, it was proposed to demand service tax on MMR Service covering the period (rom 16.06.2005 to 31.03.2009; and to demand service tax under BAS service for the financial years 2004-05 to 2008-09 vide two SCN's 16/2009 dated 21.04.2009 and 29/2009 dated 26.08.2009(Further period) .The present periodical SCN's for the subsequent period as detailed in the table Supra were issued and after due process of law, the Respondent confirmed the demands as proposed, charged interest thereon, and also imposed penalties under Section 76 and 77 of the Finance Act, 1994 ('FA for short). 11.4 Aggrieved of the above Orders, the Appellant filed Appeals before the Commissioner of Central Excise (Appeals), Chennai and the Commissioner of Central Excise (Appeals) upheld the Orders in original vide Order-in -Appeal as detailed in the table below:
44
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 11.5 Once again aggrieved by the above order, the Appellant has carried this Appeal before this Tribunal under Appeal Nos. ST/42319/2014 and ST/42292/15.
ST/40453/15 MMR April 2009- Rs 02/2014 dt 13/2011 dt 55/2010 dt & March 1,50,895/- 01.12.2014 08.02.2011 16.09.2010 BAS 2010 under MMR and Rs 77,047/-
under BAS
ST/42292/15 MMR 1.4.2010 to Rs 172/2015dt 75/2013dt 316/2011dt
& 31.03.2011 3,55,214/- 03.08.2015 31.03.2013 09.09.2011
BAS under
MMR Rs
1,83,00
BAS
11.6 The Ld. Counsel for the Appellant submitted that
the order of the Commissioner of Central Excise (Appeals) is not sustainable for the following reasons:
a) In Para No.3 of the Show Cause Notice it was recorded that the Appellant has received electricity charges and the same has not been included in the taxable value. The Service Tax (Determination of Value) Rules, 2006 provides for levy of service tax on the gross amount.
b) The Deputy Commissioner of Service Tax in page No. 12 Para No.18 has held that the electrical charges as well as charges towards electricity related works are liable to be included in the taxable value.
c) The Commissioner of Central Excise (Appeals) has given a finding that the Appellant has not reimbursed electricity 45 ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 charges and the entire amount pertains to electrical work. This observation is contrary to the Show Cause Notice and Order in Original.
d) Both the Show Cause Notice and Order in Original invoked provision of Service Tax (Determination of Value) Rules, 2006 to include the electricity charges.
e) If the charges are related to electrical work, the question of determination of value does not arise. The question would have been whether the receipts are liable to service tax or not.
f) The Appellant has sufficient documents to establish that they have paid electricity charges and subsequently reimbursed by the clients.
g) The observation by the Commissioner of Central Excise (Appeals) is contrary to the facts and law and therefore liable to be set aside.
11.7 Per Contra, the Ld. Counsel for the Respondent, Shri M. Selvakumar, Authorized Representative appeared before us and reiterated the contentions made in the OIA (Impugned Order) and submitted that there is no merit in the Appeal and requested to reject the Appeal. 46
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 11.8 We have perused the SCN/OIO and OIA and the arguments of both the sides.
We find that SCN is about electricity charges which were reimbursed to the Appellant. The OIO/OIA have traversed beyond the SCN to hold that the entire amount pertains to electrical work. The Appellant has also submitted that they have proof of the that they have paid electricity charges which were subsequently reimbursed by the clients. We find that it is nothing but reimbursement of expenses and so demands cannot sustain.
11.9 The Appellant relied upon the following case Laws in support of their arguments: -
a) Tribunal in the case of ICC Reality India Pvt Ltd Vs Commissioner of Central Excise (2013) TIOL 1751 has held that electricity charges reimbursed from tenants is not liable to be included in the taxable value.
b) the Tribunal in the case of Vansum Industries Vs Commissioner of Central Excise (2013) TIOL 92 during stay stage has held since electricity being goods, the value towards the same cannot be included for the purpose of service tax.
c) the Tribunal in the case of Eon Hinjewadi infrastructure Pvt Ltd (2012) TIOL 1688 during stay stage has held that 47 ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 electricity being goods qualifies for deduction in terms of Notification No. 12/2003 while providing Management, Maintenance and Repair Service. The same view has been taken by the Tribunal in the case of Polad Traders Pvt Vs Commissioner of Central Excise (2010) TIOL 12.
11.10 The Appellant submitted that the Impugned order failed to appreciate that any attempt to levy service tax on electricity would amount levy of service tax on goods and the same is not legally permissible. 11.11 We have already held in the above clubbed Appeal ST/42319/14 that Service Tax is not leviable on electricity charges as they are reimbursements. Therefore, the demand on MMR is payable after deducting the value of electricity charges.
11.12 In respect of Commission received from Banks/Financial Institutions for marketing their financial products, this is an already decided issue in Appellants own case by this Bench in Appeal No ST/42319/14 in this clubbed Appeal. Applying the same ratio, we hold that Service Tax is payable under Business Auxiliary services. 48
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 12.1 As Regards Appeal No. ST/42292/15, the facts are slightly different. The demands in respect of MMR and BAS are upheld as done by us in Appellant's own Appeal in ST/42319/14. The only distinguishing factor is the nature of electricity charges. The Appellant's submission is that that it is electricity charges that are reimbursable and so excludible. 12.2 Whereas in the Department on the other hand contends that the Appellant is under the obligation to bear the electricity expense upto Rs.11,000/- and the balance would be reimbursed without appreciating that the Appellant being a service provider has no obligation to bear any expenditure from their pocket and that the Commissioner of Service Tax (Appeals-II) in para 10 of the Order in-Appeal has held that the charges collected by the Appellant in the present case do not relate to electricity charges and is related to electrical related activities. 12.3 We find that there are contrary claims on the aspect of electricity charges/electrical charges on both the sides without any documentary evidence placed before us to come to a conclusion.
49
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 12.4 We remand this issue for the limited purpose of ascertaining the actual nature of electricity charges incurred in view of the contrasting claims by both the sides without letting in any evidence and verify for eligibility of the same in the course of providing MMR Service and pass orders as deem fit after following the Principles of Natural Justice within 3 months of this Order.
13. APPEAL No. ST/41717/2016. This Appeal has been filed against confirmation of demand on electricity charges under MMR Services without giving the benefit of deduction of reimbursable electricity charges along with interest and Penalty for the Period 2011-12. 13.1 The SOD No. 66/2013 dated 03.04.2013 was issued on the same facts as the earlier set of facts and not reproduced here for the sake of repetition. The brief facts also remain the same. We find that there are 3 issues in this statement of demand i. Whether the Appellant is liable to pay Service Tax on the electricity charges for the period 2011-12 under the category of MMR Services when the same is claimed to be reimbursable by the Appellant? 50
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 ii. ii) Whether the SOD is maintainable in the absence of saving clause for the charging provision? iii. Interest/penalty are payable in this case? 13.2 There is only MMR service involved in this Appeal which has been held as Taxable in Appellant's own case decided in this Cluster of Appeals and on following the same, we hold that the demand is tenable. However, the whole issue is centred around the non-inclusion of electricity charges in the gross value of the service for payment of Tax. In the SCN/OIO, the Non included amount is mentioned as electricity charges. In Appellants own case in Appeals No ST/42319/14 and ST/40453/15 this is an already decided issue and decided in favour of Appellants. On applying the ratio of the same decisions, the impugned order is set aside and therefore the imposition of Interest and penalty will not arise.
13.3 As the first question is answered in favour of the Appellants, there is no requirement to visit the second and third question framed by us.
13.4 The Appeal is allowed with consequential benefits as per Law.
51
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017
14. Appeal Nos. ST/41569/17 to 41572/17:
14.1 These Appeals have been filed by the Appellant against the confirmation of demand on electricity charges without giving the benefit of deduction of reimbursable electricity charges under MMR Services. 14.2 The Appellant contended that they have discharged service tax on the taxable value as determined under Section 67 of the Finance Act, 1994 as amended. The Appellant paid the electricity charges to the Tamil Nadu Electricity Board and subsequently recovers the same. The Appellant did not include the electricity charges reimbursed, since electricity per se is goods and therefore not liable to service tax. Further the charges towards electricity recovered from the flat owner and paid to electricity Board is not a consideration for providing taxable services. 14.3 The brief facts as culled out from the impugned order are that the Appellants are providers of Security Service and Maintenance of Flat Service etc. hold registration Certificate No. AAGFP9613RSTO01. It was noticed that the appellant have collected electricity charges from their clients, which is includible in the taxable value in respect of 52 ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 Maintenance or Repair Services vide Section 65(64) of the FA 1994 on which the appellant paid service tax. As the electricity charge was not included in the taxable value by the Appellant for payment of Tax, the following periodical Statements of Demand/Show Cause Notice were issued.
Sl. SCN No/SOD No OIA No /Date Service Tax For the period No. &date demanded Rs.
1 SOD23/2014 dated 78-81/2017(ST- 2,69,858/- April,2012 to 16.05.2014 II) dt 10.3.2017 June, 2012 2 SCN19/2014 dated -do- 1,35,896/- July, 2012 to 20.08.2014 March, 2013 3 SOD 05/2015 dated -do- 1,80,674/- April, 2013 to 25.03.2015 March, 2014 4 SOD 12/2015 dated -do- 11,170/- April, 2014 to 12.08.2015 March, 2015 14.4 The Learned Adjudicating Authority after due process of law, passed the OIO 's (i) confirming the demand of service tax (under Section 73 of the Act along with appropriate interest under Section 75 of the Act and (ii) imposing 10% penalty under Section 76 of the Act and penalty of Rs.10,000/- under Section 77 of the Act in respect of each demand/notice.
14.5 Aggrieved, the Appellant filed Appeals before the Commissioner (Appeals) and the Commissioner (Appeals II) Chennai upheld the OIO's except for dropping the penalty imposed under Section 77 of the Act.
53
ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 14.6 Once again aggrieved, the Appellant filed 4 Appeals before this Tribunal numbered as ST/41569/17 to ST/41572/17.
14.7 The Ld. Advocate Ms. Radhika Chandrasekhar for the Appellant and the Authorized Representative Mr. M. Selvakumar, appeared before this Tribunal and made their submissions.
14.8 The only issue before us in all the 4 Appeals is whether the Appellant is liable to pay service tax on the electricity charges as electricity per se is goods which is outside the ambit of service tax, 14.9 As the issue involved in all the 4 Appeals are common, they are clubbed together for a common decision. 14.10 The contention of the Appellant is that they have paid whatever electricity charges collected from the association to the TNEB.
14.11 From the Para 2(i) of the OIA (Impugned order) we find that as electricity charges were not included, the 4 SOD/SCN's were issued by the Department. Further, a 54 ST/42319/2014 ST/40453,42292&42329/2015 ST/41717/2016 ST/41569-41572/2017 similar issue was decided in the SOD preceding the present impugned order which was decided by us in favour of the Appellant i.e. APPEAL No. ST/41717/16 relying upon Appellants own case in the present clubbed Appeals, Appeal Nos. ST/42319/14 and ST/40453/15. The Appellant has relied upon several decisions in support of their claim. Based on the ratio of the above decisions, we have no hesitation in holding that electricity charges are not includible under the category of MMR Services and set aside the demand. As the demand of Tax fails, the consequent interest and penalty automatically get extinguished.
Therefore, the present Appeals ST/41569/17 to ST/41572/17 are allowed with consequential benefits.
15. Finally, we sum up the entire proceedings as follows: -
Sl. CESTAT Issue Period Amount (Rs) Decision No. Appeal No 1 ST/42319/14 Security April 2004 to 24,93,989/- Demand under MMR & BAS Agency March 2008 ( Rs.18,49,747 confirmed. Electricity charges &Cleaning April 2008-to apprtd) & are permitted to deducted Serv - March 2009 Rs.2,96,055 from the gross value of service.
Before Rs.2,27,849 & Remanded for recomputation negative Rs.1,31,435 of demand under MMR.
list Interest and Penalty upheld.
2 ST/42329/15 Security Oct 2004 to Rs.6,11,003 Demand under Security
Agency Sept 2009 agency service dropped on the
Service grounds of overlapping
demand with MMR in Sl No 1
above Appeal and also on the
grounds of limitation.
3 ST/40453/15 MMR & April 2009- Rs 1,50,895/- Demand under MMR is upheld
55
ST/42319/2014
ST/40453,42292&42329/2015
ST/41717/2016
ST/41569-41572/2017
BAS March 2010 under MMR and after allowing deduction of
Rs.77,047/- electricity charges. The
under BAS demand under BAS is also
upheld. Interest & Penalty
upheld
4 ST/42292/15 MMR & 1.4.2010 to Rs.3,55,214/- Demands under MMR & BAS
BAS 31.03.2011 under MMR Rs upheld. In respect of re-
1,83,00 BAS imbursable expenses,
remanded back to verify the
documentary evidence and
pass suitable orders.
5 ST/41717/16 Various April 2011 to Rs.5,54,980/- Allowed with consequential
services March 2012 Tax Rs.55,498 benefits as per Law
prior to Penalty
1.7.2012
6 ST/41569 to i)MMR i)April 2012 i)Rs.2,69,858 Demands set aside with
41572/17(4 ii)MMR to June 2012 ii)Rs.1,35,896/- consequential benefits
Appeals) iii)MMR ii)July 2012 iii)Rs.1,80,674/-
iv)MMR to March iv)Rs.11,170
2013
iii) April 2013
to March
2014
iv) April 2014
to March
2015
PROMAGS: 9 CESTAT APPEALS , 9 OIA, 9 OIO, 5 SCNS AND 4 SOD 'S
16. The Appeals are disposed of with consequential benefits if any as above.
(Order pronounced in open court on 29.10.2025) Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
MK