Custom, Excise & Service Tax Tribunal
Atlantis Multiplex Private Limited vs Commissioner (Appeals) ... on 1 May, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT No. I
Service Tax Appeal No.70012 of 2020
(Arising out of Order-in-Appeal No.213/ST/Alld/2019 dated 04/10/2019
passed by Commissioner (Appeals) Customs, Central Excise & Service Tax,
Allahabad)
M/s Atlantis Multiplex Pvt. Ltd., .....Appellant
(34-B, M.G. Marg, Civil Lines, Allahabad-211001)
VERSUS
Commissioner of Central Excise &
CGST, Allahabad ....Respondent
(38, M.G. Marg, Civil Lines, Allahabad-211001) WITh Service Tax Appeal No.70432 of 2021 (Arising out of Order-in-Appeal No.213/ST/Alld/2019 dated 04/10/2019 passed by Commissioner (Appeals) Customs, Central Excise & Service Tax, Allahabad) Commissioner of Central Excise & CGST, Allahabad .....Appellant (38, M.G. Marg, Civil Lines, Allahabad-211001) VERSUS M/s Atlantis Multiplex Pvt. Ltd., ....Respondent (34-B, M.G. Marg, Civil Lines, Allahabad-211001) APPEARANCE:
Shri Tanmay Sadh, Advocate for the Appellant-Assessee Shri Manish Raj, Authorised Representative for the Respondent- Revenue CORAM: HON'BLE MR. AJAY SHARMA, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NOs.70234-70235/2025 DATE OF HEARING : 06 March, 2025 DATE OF PRONOUNCEMENT : 01 May, 2025 Service Tax Appeal No.70012 of 2020 &
2 Service Tax Appeal No.70432 of 2021 SANJIV SRIVASTAVA:
These appeals one by the assessee (appellant) and other by revenue are directed against Order-in-Appeal No. 213/ST/Alld/2019 dated 30.09.2019 of the Commissioner (Appeal) Central Excise and Service Tax, Allahabad. By the impugned order demand of service tax made against the DG Charges have been set aside and the demand made against the DGAC charges have been upheld. Impugned order therefore decides the Appeal No. 145/ST/Appl/Alld/2019 dated 06.5.2019 filed by the appellant against the Order-in-Original No. ST- 05/2018 (05 of 2019) dated 28.02.2019 ".......In view of the above, the demand has to be re- calculated for the normal period as per section 73(1) of the said Act. Consequently, there is no ground to impose penalty under section 78 of the said Act.
8. Department will re-calculate the service tax liability accordingly and the appellant will pay the service tax along with interest and penalty under section 76 of the said Act amounting to ten percent of the re-calculated service tax liability."
2.1 The appellant are engaged in providing 'renting of immovable property service', by way of leasing of space for shops etc., in their complex (Mall).
2.2 A enquiry conducted by the DGCEI revealed that the appellant had not paid Service Tax on the DG charges and DGAC charges for providing services of backup through DG Sets and Air conditioning services through HVAC (Heating Ventilation and Air conditioning) plant, received in respect of leased area from the period from July 2012 to June 2017.
2.3 The amount of Service Tax not paid for F.Y. 2012.13 ( from 01.07.2012) to 2016-17 was calculated on the basis of separate signed charts submitted by the apppelant during investigation, and for the F.Y. 2017-18 (upto 30.06.2017), on the basis of details provided by them vide letter dated Service Tax Appeal No.70012 of 2020 & 3 Service Tax Appeal No.70432 of 2021 30.12.2017. The detail of Service Tax not paid is as per table below:
(Amount in RS.) F.Y. DG charges DGAC charges Gross value Service Tax (including Cess) of services Rate Payable 2012-13 (from July, 84,83,596 75,12,827 1,59,96,423 12.36% 19,77,158 2012) 2013-14 37,02,377 1,64,08,595 3,01,10,972 12.36% 37,21,716 2014-15 39,74,963 84,59,415 1,24,34,378 12.36% 15,36,889 2015-16 (from April, 2,04,177 14,09,338 16,13,515 12.36% 1,99,430 2015 to May,2015) 2015-16 (from 12,88,430 35,24,352 48,12,782 14.00% 6,73,789 June,2015 to Oct,2015) 2015-16 (from Nov, 7,11,728 35,69,873 42,81,601 14.50% 6,20,832 2015 to March, 2016) 2016-17 (from Apr, 2,39,987 14,22,724 16,62,711 14.50% 2,41,093 2016 to May, 2016) 2016-17(from June, 2,68,847 69,58,221 72,27,068 15.00% 10,84,060 2016 to March, 2017) 2017-18 (upto 2,76,701 22,01,297 24,77,998 15.00% 3,71,700 30.06.2017) Total 2,91,50,806 5,14,66,642 8,06,17,448 1,04,26,667 2.4 By not paying the service tax (inclusive of cess) in respect of DG and DGAC charges recovered by the appellant from their clients/ service recepients, appellant contravened the following provisions:
(i) Section 66B of the Finance Act, 1994 inasmuch as they failed to pay service tax on appropriate value of taxable services, namely DG charges/DGAC charges;
(ii) Section 67 of the Act for their failure to assess Service Tax on the gross value of taxable services rendered by them;
(iii) Section 68 of the Act read with Rule 6 of the Service Tax Rules, 1994, for their failure to pay the due Service Tax to the Govt. Ex-chequer by the prescribed due dates;
Service Tax Appeal No.70012 of 2020 & 4 Service Tax Appeal No.70432 of 2021
(iv) Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994, for their failure to assess the tax due on the services provided by them and file the proper ST-3 returns with the Department by not showing the value of DG charges/ DGAC charges in their periodical ST-3 returns;
(v) Section 91 read with Section 95 of the Finance (No.
2) Act, 2004 inasmuch as they failed to pay Education Cess on the taxable services;
(vi) Section 136 read with Section 140 of the Finance Act, 2017 inasmuch as they failed to pay Secondary and Higher Education Cess on the taxable services;
(vii) Section 119(2) of the Finance Act, 2015 as they failed to pay Swachh Bharat Cess on the taxable services w.e.f. 15.11.2015 on the taxable services;
(viii) Section 161(2) of Finance Act, 2016 (28 of 2016) inasmuch as they failed to pay Krishi Kalyan Cess on the taxable services w.e.f. 01.06.2016 on the taxable services 2.5 The activities undertaken by the appellant for which they were collecting consideration under the head of DG and DGAC charges were clearly taxable in terms of the provisions of Finance Act, 1994. They are registered with department and are paying service on electricity and HVAC charges collected from tenants/ lessees as part of common area maintenance charges, but deliberately did not pay service tax on these charges which were collected by them from the same tenant in terms of the same agreement by raising separate invoices. Thus appellant willfully and knowingly by not declaring the fact of collection of these charges on their ST-3 return suppressed the value of taxable service provided and the material facts with intention to evade payment of service tax. Thus for the suppression of facts and the contraventions of the provisions of the law, with intention to evade payment of tax, extended period of limitation as per proviso to section 73 (1) was invokable for making the demand of tax short/ not paid.
Service Tax Appeal No.70012 of 2020 & 5 Service Tax Appeal No.70432 of 2021 2.6 Accordingly, a show cause notice dated 31.01.2018 was issued to the appellant asking them to show cause as to why:-
(i) Service Tax amounting to Rs. 1,04,26,667/- (Rupees One Crore Four Lakh Twenty Six Thousand Six Hundred Sixty Seven only) [Service Tax+ all applicable cesses] as detailed in Para-5 above, should not be of the Finance Act, 1994 read with Sections 91 and 95 of the finance (No.2) Act, 2004, Sections 136 and 140 of the Finance Act, 2007,Section 119(2) of the Finance Act, 2015 and Section 161(2) Finance Act, 2016 (28 of 2016);
(ii) Appropriate interest on the amount demanded at (i) above, should not be demanded and recovered from them under Section 75 of the Finance Act, 1994;
(iii) Penalty should not be imposed upon them under Section 76 of the Finance Act, 1994, as they did not pay the Service Tax as above.
(iv) Penalty should not be imposed upon them under Section 77 of the Finance Act, 1994, for violation of Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994, as they failed to file proper ST-3 returns;
(v) Penalty should not be imposed upon them under Section 78(1) of the Finance Act, 1994, for wilful mis-statement and suppression of facts and contravention of the statutory provisions of the Finance Act, 1994 and the rules made thereunder with intent to evade the payment of Service Tax as described hereinabove including in para 6.1 and 6.2.
2.7 The show cause notice was adjudicated by the original authority vide order referred in para 1 holding as follows:
"ORDER
1. I confirm the demand of Rs, 1,04,26,667/- (including £d.
Cess and Higher Ed. Cess and Swach Bharat Cess) (Rupees One Crore Four Lakh Twenty Six Thousand Six Hundred Sixty Seven only) against the Party M/s against the Party M/s Atlantis Multiplex Pvt. Ltd., 38-B M.G. Marg, Civil Lines, Service Tax Appeal No.70012 of 2020 & 6 Service Tax Appeal No.70432 of 2021 Allahabad (U.P.) under proviso to Section 73(1) of Chapter V of the Finance Act 1994 read with Section 91 and 95 of the Finance (No. 2) Act, 2004, Section 136 and 140 of the Finance Act, 2007, Section 119 (2) of the Finance Act, 2015 and Section 161 (2) of Finance Act, 2016 (28 of 2016).
2. I also confirm interest payable under Section 75 of the Finance Act, 1994, at the applicable rate, on the amount being confirmed at 1 above
3. I confirm the demand of Rs. 10,42,667/- (Rupees Ten Lakh Forty Thousand Six Hundred Sixty Seven Only) upon the party under Section 76 of the Finance Act, 1994.
4. I impose a penalty of Rs. 10,000/- (Ten thousand) under Section 77 (2) of the Finance Act 1994 for violation of Section 70 of the Act read with Rule 7 of the Rules, for violation non-filing of the statutory ST-3 returns during 2012- 13 to 2017-18.
5. I impose a penalty of Rs. Rs. 1, 04,26,667/- ((Rupees One Crore Four Lakh Twenty Six Thousand Six Hundred Sixty Seven Only) upon the party under Section 78 (1) of the Act shall stand reduced to 25% of tax amount if the entire dues including interest and penalty imposed as above are paid within 30 days of receipt of this order."
2.8 Aggrieved appellant filed the appeal before First Appellate Authority who has vide the impugned order partly allowed the appeal by the impugned order referred in para 1 above.
2.9 Aggrieved by the impugned order both appellant and revenue are in appeal.
3.1 We have heard Shri Tanmay Sadh Advocate for the appellant and Shri Manish Raj, Authorized Representative for the revenue.
3.2 Arguing for the appellant learned counsel submits that:-
The Clause 2.4 and 4 of Annexure B to the Lease Deed executed between the Appellant and M/s Future Retails Ltd. Provides that the Appellant is bound to provide 100% Service Tax Appeal No.70012 of 2020 & 7 Service Tax Appeal No.70432 of 2021 backup through DG sets to the Lessee and Central air conditioning with chilled water systems (page 45 of the paperbook) Furthermore, the Extract of the Minutes of the Meeting dated 23.7.2013 held between the Appellant and Future Group provides that the Appellant shall charge Rs. 16 per square feet till the time the mall gets a power connection from UPPCL and after getting the connection the said charge shall be reduced to Rs. 12.50 per square ft. (page 46 of the paperbook) The said figure of Rs. 16 per sq. ft was arrived at on the basis of the estimated DGAC charges incurred in the previous year divided by the area occupied by the lessee.
The said amount was being charged towards the reimbursement of the electricity cost incurred on account- of providing electricity through Diesel Generator for cooling the mall. The Appellant was raising separate invoices towards DG charges and DGAC charges to the lessee and no service tax was being charged on the same inasmuch as the same was merely a sale of electricity.
The charges of the DGAC that is being levied on the appellant is not a service rather it is in nature of sale of electricity that is being provided by the Appellant to the lessee when there is shortage of supply by PVVNL during the working hours. The Commissioner (Appeals) after considering the submissions of the Appellant has set aside the demand raised towards DG charges but the demand towards DGAC charges have been confirmed on the ground that since the appellant is collecting charges for air conditioning in terms of per sq ft. and is providing the said service through Heating Ventilation and Air Conditioning Plant set up by the appellant thus the said air conditioning service cannot be treated as a mere supply of electricity That the Ld. Commissioner (Appeals) has failed to consider that merely because the Appellant is charging fixed Service Tax Appeal No.70012 of 2020 & 8 Service Tax Appeal No.70432 of 2021 charged towards DGAC charges the same does not change the fact the Appellant is merely supplying electricity to the HVAC plant for cooling the mall and the amount being charged is only towards the supply made when there is a power cut and not during the regular hours. Thus, the said amount is nothing but a reimbursement towards amount spent by the Appellant in supplying electricity for cooling the mall. Thus no service tax could have been imposed in respect of DGAC charges.
Reliance is placed on the following decisions:
o ICC Realty (India) Pvt. Ltd. [2013 (32) STR 427 (T- Mum)] o Varun Estates P Ltd. [ Order dated 10.10.2023 Service Tax Appeal No 50523/2017 Delhi Bench] o Shipra Estates Ltd. [Order dated 07.06.2024 Service Tax Appeal No 71101/ 2018 Allahabad Bench] o Electronics Technology Parks [Order dated 26.07.2021 Service Tax Appeal No 266319/2013 Bangalore Bench] 3.3 Authorized representative for the revenue reiterated the findings recoded in the impugned order for confirming the demand made against DGAC charges and the grounds taken in appeal filed by the revenue.
4.1 We have considered the impugned order along with the submissions made in appeals and during the course of arguments.
4.2 Impugned order records the findings as follows:
"5. I have gone through the case record. From the record it is apparent that the Appellant are supplying electricity through their DG set to the tenants of their Mall and charges for the same are recovered in the name of "DG Charges" in terms of per unit electricity supplied. The Service Tax Appeal No.70012 of 2020 & 9 Service Tax Appeal No.70432 of 2021 appellant also provided air conditioning services to the tenants and recovered charges in the name of "DGAC Charges " in terms of per sq. ft. of the rented area. As per the Minutes of meeting held on 23 July 2013 between the Appellant and the Future Group (the tenant), submitted by the Appellant as Annexure D of the Paper Book, the DG Charges will be Rs 16.50 per unit. From this it is clear that the Appellant are only supplying power in lieu of DG Charges Electrical energy is classified under Chapter Heading 2716 of Central Excise Tariff and the same, therefore, has to be treated as goods'. Consequently, there is no ground for levy of service tax on supply of goods. Hence, the demand of service tax on "DG Charges" is not sustainable and the same is set aside
5. As per the said Minutes of the meeting referred to in the above para, the charges for air conditioning are collected in terms of per sq. ft. The said service is provided through the Heating Ventilation and Air-Conditioning (HVAC) plant set up by the appellant for the said purpose. Hence, the service of air conditioning is a service which is liable to service tax. The same cannot be treated as mere supply of electricity. Therefore, demand of service tax on "DGAC Charges" is sustainable.
7. The appellant contends that extended period cannot be invoked as there has been no suppression of facts or willful misstatement on their part. It has been further submitted that the appellant was already subjected to Service tax audit for the same period. Allahabad Circle of the Audit Commissionerate Lucknow has already conducted audit of the appellant for the period from October 2010 to December 2015. The same argument was raised before the adjudicating authority as recorded in para 3.15 ( page No.18 ) of the impugned order. This fact has not been controverted by the adjudicating authority. Thus, audit of Service Tax Appeal No.70012 of 2020 & 10 Service Tax Appeal No.70432 of 2021 the appellant was conducted by the department for the period from October 2010 to December 2015 and the instant demand pertains to the period from July 2012 to June 2017. Further, the present demand has been raised only on the basis of record of the appellant. In this background, the charge of suppression of facts and misstatement is not sustainable. The facts on the basis of which present demand has been raised were already in the knowledge of the department through Audit. Hon'ble Tribunal in the case of TRANS ENGINEERS INDIA PVT LTD. reported at 2015 (40) STR 490 (Tri.- Mumbai), has held that Revenue Authority not to invoke extended period of limitation, when records of the assessee audited by the officers. Hence, there is no ground to invoke extended period of limitation under the proviso to section 73(1) of the said Act. In view of the above, the demand has to be re- calculated for the normal period as per section 73(1) of the said Act. Consequently, there is no ground to impose penalty under section 78 of the said Act."
4.3 From the above it is evident that impugned order has modified the order in original to the extent of restricting the demand to normal period of limitation only in respect of the DGAC Charges. The demand made for extended period has been set aside in respect of these charges, whereas the entire demand made in respect of DG Charges has been set aside. Also the penalty imposed under section 78 has been set aside.
4.4 Revenue has in their appeal stated as follows:
"In this regard, it is submitted that in the impugned show cause notice it was nowhere contended that electricity is not a goods end further, service tax was also not demanded on the sale/production of electricity as the production of electricity in itself is not a service. What is service is /"transmission or distribution of electricity" But, the said activity/service when provided by "an electricity or distribution utility becomes non-taxable by virtue of its Service Tax Appeal No.70012 of 2020 & 11 Service Tax Appeal No.70432 of 2021 inclusion in the' negative list of services under Section 66D(k) of the Finance Act. However, whether such particular activity would be covered under the Negative List or not, has been further clarified in the Act. The term "electricity transmission or distribution utility" has been defined under Section 65B (23) of the Act, as under:
"(23) "electricity transmission or distribution utility"
means the Central Electricity Authority; a State Electricity Board,' the Central Transmission Utility or a State Transmission Utility notified under the Electricity Act 2003 (36 of 2003); or a distribution or transmission licensee under the said Act, or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government;"
9. From the above, it appears that any entity would be covered under this entity only if it is entrusted with such function by the Central or a State government or if it is , for such distribution, a distribution licensee licensed under the Electricity Act,2003 (36of 2003). Whereas, in the present case the appellant are neither holding any such licence nor entrusted with any such function by the Central or the State government, therefore, their activity will not be covered under the negative list of services.
Further, the electricity back-up/DG_ service is being provided by the. Appellant under obligation with the lessees/ occupants of Atlantis Mall to provide them uninterrupted power supply under "Para 4.6- Common Area Maintenance" and "Para 5- Obligations or the Parties" of lease deed agreements. In such type of contract/agreement, since is no transfer of title of electricity (goods) by way of sale, gift or in any other manner, therefore, this activity of AMPL cannot be covered under the definition of sale/supply of goods,
10. At Para 7 of the OIA, it has been observed that the audit of the appellant was conducted by the department for Service Tax Appeal No.70012 of 2020 & 12 Service Tax Appeal No.70432 of 2021 the period from October 2010 to December 2015 and the instant demand pertains to the period from July 2012 to June 2017, based on record of the appellant, hence, the charge of suppression of facts and mis-statement is not sustainable and thus there is no ground to invoke extended period of limitation under the proviso to section 73 (1) of the said Act.
As regards the above observation at para-7 above, it is submitted that the existence of provision of audit does not bar DGGI from initiating an investigation and issuing a Show Cause Notice for demand of service tax, not paid/short paid by a person under section 73(1) of Finance Act on a specific and different issue where non-payment has been noticed. It is also submitted that even when audit is conducted, there is inherent reservation of right to take appropriate action to safe guard the revenue in case of any irregularities escaping identification during the period covered under audit arising inter-alia due to mis-information or non- disclosure of information or non submission of relevant documentation on part of the assessee.
11. More ever, non disclosure can exist even in a situation where verification in the nature of audit may have been conducted, as upheld in the order of Hon'ble Bombay High court in the case of M/s. Tigranis Metal and Steel Industries (P) Ltd. Vs. Commissioner of Central Excise (2015(326)ELT 650 (Bom). The above view is also supported by the judgment of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Surat- I Vs. Neminath Fabrics Private Ltd (2010 (256) EL T 369 (Guj), in which it was observed that "The proviso cannot be read to mean that because there is knowledge the suppression which stands established disappears".
12. Further, the judgment of Trans Engineers India Pvt. Ltd. does not appear to be relevant as it deals with audit being conducted twice for the same period, whereas in the Service Tax Appeal No.70012 of 2020 & 13 Service Tax Appeal No.70432 of 2021 instant case the investigation by DGGI was on a specific issue.
13. Therefore, the Hon'ble Commissioner (Appeals) has erred to observed that the Revenue Authority may not to invoked extended period of limitation, when records of the assessee audited by the officers. Hence, there is no grounds to invoke extended period of limitation under the proviso to section 73(1) of the said Act. In view of the above, the demand has to be re-calculated for the normal period as per section 73(1) of the said Act Consequently, there is no ground impose penalty under section 78 of the said Act. Department will re-calculate the service tax liability accordingly and the appellant will pay the service tax along with interest and penalty under section 76 of the said Act amounting to ten percent of the re-calculated service tax liability."
4.5 Issue of levy of service tax on the DG Charges collected by the appellant for providing back up in case of breakdown of normal supply of electricity by the PUvVNL is no longer res- integra. In case of Kiran Gems Pvt. Ltd. [2019 (25) G.S.T.L. 62 (Tri. - Ahmd.)] Ahmedabad Bench held as follows:
"4. We have carefully considered the submissions made by both the sides and perused the records, we find that the limited issue is to be decided by us is that whether in the course of service of renting of immovable property service, the actual electricity charges first paid by the appellant and subsequently taken reimbursement from tenants (service recipient) is includible in the gross value of service of renting of immovable property service. As against renting of immovable property the only rent collected by the appellant from their tenants is the consideration towards the rent. The electricity is consumed by the service recipient, therefore, they are liable to pay the same actual unless the same is included in the rent. In the facts of the present case, the electricity expenses is supposed to be borne by the tenants Service Tax Appeal No.70012 of 2020 & 14 Service Tax Appeal No.70432 of 2021 (service recipient), therefore, merely facilitating the payment of electricity charges by the appellant and subsequently taking the reimbursement of the same will not form part and parcel of gross value of service of renting of immovable property. This issue is no longer res integra as the same has been decided time and again in the following decisions :-
• ICC Reality (India) Pvt. Ltd. v. CCE, Pune- 2013 (32) S.T.R 427 (Tri. - Mumbai)
9. We have gone through the Lease Agreements. As per the terms and conditions of the Lease Agreements, the tenants have to pay electricity charges directly to the MSEB and the appellants are also providing electricity through generator set in case there is a power failure and the appellants are charging for the same. We find that electricity is specifically covered under Tariff Heading 27 of the Central Excise Tariff Act. We find that as per the provisions of Maharashtra Value Added Tax Act, 2002, electricity is also covered under Schedule A Sr. No. 20 and charged to Nil rate of tax. In view of this, we find the electricity is goods chargeable to duty under Central Excise Tariff as well as under the Maharashtra Value Added Tax Act, 2002. Therefore, the supply of electricity to tenant amounts to sale of goods and not supply of service. Further the Notification No. 12/2003-S.T., dated 20-6-2003 exempt from Service Tax, any value of goods supplied by service provider to service recipient. Further we find that the Commissioner of Central Excise Pune-III vide Order-in-Original dated 28-11-2011 relied upon by the appellants dropped the proceedings which were initiated on the same ground in the case of M/s. Panchshil Tech Park Ltd. The Commissioner of Central Excise in the adjudication order held that electricity is goods and chargeable to Nil excise duty. The decision of the adjudicating authority is accepted by the Revenue as per the communication dated 26-9-2012 by the Service Tax Appeal No.70012 of 2020 & 15 Service Tax Appeal No.70432 of 2021 Commissioner of Central Excise, Pune-III. The present appellants are also under the jurisdiction of Pune-III Commissionerate.
10. In view of the above discussion, we find merit in the contention of the appellants that the electricity charges collected from the tenants cannot be formed part of the assessable value for the purpose of Service Tax as provider of renting of immovable properties.
11. Impugned orders are set aside and the appeals are allowed.
• M/s. Hotel Lake View Ashok v. CGST, CE and CC, Bhopal - 2018-TIOL-2891-CESTAT-DEL
5. We have heard both the sides and have also perused the record of the appeal. It is a matter of record that appellants have been charging 20% of sales proceeds from "Shan-e-Bhopal Restaurant" as a commission for providing support service to business in the form of providing space for the restaurant and other infrastructure support which included the premises for housing restaurant, manpower, security service, etc. It is also a matter of fact that electricity and water charges have also been recovered by the appellant from the restaurant owner on actual basis and same has been deposited with the respective authorities providing electricity and water to the said premises. It has also been argued that so far as the Service Tax on 20% commission charges is concerned, the appellant has also deposited the same with the Government exchequer and wherever there has been any delay in payment of Service Tax, same has been deposited with due interest leviable thereon.
6. In view of the above, the only question which remains before us for deciding is whether the electricity and water charges recovered by the appellant will form part of the value of the service as per the provisions of Finance Act, Service Tax Appeal No.70012 of 2020 & 16 Service Tax Appeal No.70432 of 2021 1994 or not. It can be seen that electricity and water services are being provided by other Government agencies and the charges for use of the said facilities is being raised on the service provider i.e. the appellant on actual basis which the appellant is collecting from the "Shan-e-Bhopal Restaurant" and same is deposited with the authorities providing electricity and water. In view of these facts, it can be concluded that the appellant is purely working as an agent in collecting the charges with regard to supply of water and electricity and deposited the same with authorities concerned. The provisions of Rule 5(2) of Service Tax (Determination of Value) Rules provides that wherever the expenditure cost incurred or received by the service provider as a pure agent, same shall be excluded from the taxable value of the service. As all the conditions provided in Rule 5(2) of Service Tax Valuation Rules, 2006 are satisfied, we are of the opinion that appellant has behaved purely as and agent and the charges of electricity and water cannot be included in the taxable value of the services, namely support service of business provided by the appellant. In view of the above, we hold that - (i) The appropriate Service Tax is payable on 20% commission charged by the appellant from "Shan-e-Bhopal restaurant" for providing the premises and other infrastructure facilities. (ii) However, the charges collected by them towards electricity and water, are not to be included in the taxable value for charging Service Tax.
7. In view of the above, we do not find any merit in the order passed by Commissioner (Appeals) and accordingly, we set aside the same. The appeal is allowed.
• M/s. S.B. Developers Ltd. v CST, New Delhi - 2018- TIOL-1866-CESTAT-DEL
4. The demand raised and confirmed by the Revenue is on various grounds which are discussed below" -
Service Tax Appeal No.70012 of 2020 & 17 Service Tax Appeal No.70432 of 2021
4.(i) The appellant received electricity from the Grid and in addition also had the capacity to generate electricity using generators. They supplied electricity from both sources to the tenants of the Mall and the payment therefore was collected by the appellant. But only in respect of the electricity received from the Grid, the charges are paid to the Grid. The Department was of the view that the charges recovered for the electricity generated by the appellant using generators and supplied to the tenants, are to be included in the maintenance charges recovered from the tenants by the appellant and such amounts will be liable to payment of Service Tax.
(ii) Ld. Advocate for the appellant submitted that the appellant was collecting electricity charges from the tenants and depositing the same with the Electricity Board. He specifically contended that the total amount paid to the Grid by way of electricity charges in the various years was much more than the electricity bills reimbursed to the appellant by the tenants. Accordingly, he submitted that the demand of Service Tax on the electricity charges cannot be sustained. In this connection, he relied on the decision of the Tribunal in the case of Anandram Developers Pvt. Ltd. v. CST, Chennai - 2017 (6) G.S.T.L. 75 (Tri. - Chennai).
(iii) Opposing the argument, Ld. AR submitted that the appellant will be not liable to pay Service Tax only in respect of the electricity charges recovered from the tenants and paid to the Electricity Board. He submitted that the adjudicating authority has upheld the demand in respect of the electricity charges recovered by the appellant as part of their maintenance charges. He contended that the electricity generated and supplied by the appellant to the tenants and covered by the agreement with the tenants will be liable to payment of Service Tax under the category of maintenance.
Service Tax Appeal No.70012 of 2020 & 18 Service Tax Appeal No.70432 of 2021
(iv) In the case of ICC Reality India Ltd., the Tribunal had occasion to consider whether the reimbursement of electricity charges from tenants is to be included in the consideration for payment of Service Tax in the category of renting of immovable property. The observation of the Tribunal is reproduced below:
"9. We have gone (sic) that electricity is goods and chargeable to Nil excise duty. The decision of the adjudicating authority is accepted by the Revenue as per the communication dated 26-9-2012 by the Commissioner of Central Excise, Pune-III. The present appellants are also under the jurisdiction of Pune-III Commissionerate."
(v) By following the above decision which has further also been followed in other cases, we conclude that there can be no levy of Service Tax on the electricity charges which are reimbursed to appellant by the tenants. However, on a perusal of the agreement entered into by the appellant with the tenants, we note that the tenant is also liable to pay to the appellant for the electricity generated by the appellant and supplied to the tenant as part of the maintenance agreement. The Ld. Advocate has drawn our attention to the fact that in the various years, the total amount of payment to the electric supply undertaking by the appellant is much more than the total amount of electricity charges recovered from the tenants. From the figures, we are unable to come to the conclusion regarding the amount of electricity generated by the appellant and supplied to the tenants by using thereon generating sets. The payment for which is includible in the maintenance charges. In this connection, we direct the adjudicating authority to allow the claim of the appellant with respect to reimbursement of electricity charges from tenants in respect of electricity received from the Grid. At the same time the appellant is directed to submit before the adjudicating authority the details of Service Tax Appeal No.70012 of 2020 & 19 Service Tax Appeal No.70432 of 2021 electricity generated by them and supplied to the tenant and the charges recovered therefor. This will be includible in the consideration of maintenance charges and liable to Service Tax.
• Commissioner of GST and Central Excise, Chennai v. M/s. Ticel Bio Park Ltd. - 2018-TIOL-2195-CESTAT-MAD
5. The Revenue is aggrieved by the order passed by the Commissioner (Appeals) who set aside the entire demand. The demand in respect of electricity charges and air-conditioning charges being reimbursable expenses, we are of the view that these cannot be included in the total value of taxable services. For this we take sustenance from the decision of the Tribunal vide Final Order Nos. 41806 & 41807/2017, dated 28-8-2017 in the case of M/s. Plaza Maintenance and Service Ltd. This issue is found against the Revenue, and we uphold the order passed by Commissioner (Appeals) on setting aside demand on electricity charges and air-conditioning charges.
6. On perusal of records, as per lease deed, the respondent is under obligation to maintain common areas and provide various amenites. The amount collected as operation and maintenance charges represents charges for maintenance of the building rented out to the clients. The defense put forward by the Ld. Counsel for respondent is that these charges are integral part of the rent. Though, the respondent has included such charges under Renting of Immovable Property Service and is discharging Service Tax under such category after 1-6- 2007, the issue whether they were providing any maintenance service prior to 1-6-2007 and whether these will fall under MMR services has to be looked into. For this reason, we find that the matter requires to be remanded to the adjudicating authority who shall look into the issue whether the demand on operation and maintenance Service Tax Appeal No.70012 of 2020 & 20 Service Tax Appeal No.70432 of 2021 charges will sustain. The adjudicating authority shall also consider the issue of limitation as put forward by the Ld. Counsel for the respondent.
7. The appeal filed by the department is partly remanded in the above terms.
In view of the above judgments, the issue involved herein has been settled inasmuch as the electricity charges reimbursed to the service provider by the service recipient not includible in gross value of renting of immovable property service. Following the ratio of the above judgments and on our observation given hereinabove, we are of the view that the demand is not sustainable.
4.6 Allahabad Bench has in case of Shipra Estates Ltd. [Final Order No 70329-70330/2024 dated 07 June, 2024 in ST/71101/2018] held as follows:
"4.19 The learned Chartered Accountant submitted that Appellants had installed a D G Set from where electricity is supplied to the residents in case of power cut. Amount is charged on the basis of electricity consumed. He further submitted that electricity is goods. It falls under chapter heading 27160000 of Central Excise Tariff and is liable to NIL rate of Central Excise Duty. For the period upto 30.06.2012 Notification No.12/2003 dated 20.06.2003 exempted so much of the value of all taxable service as is equal to the value of goods and materials sold by service provider to the recipient of service, subject to the condition that there is documentary proof specifically indicating the value of said goods. He relied the decision of this Tribunal in case of ICC Reality (India) Pvt. Ltd. Vs. CCE reported in 2013 (32) S.T.R. 427 and submitted that supply of electricity being goods, service tax cannot be demanded on the same. On a specific query from the Bench, the learned counsel clarifies that they have installed pre paid meters and the amount for supply of electricity is charged on the basis of units consumed by the individual resident. As Service Tax Appeal No.70012 of 2020 & 21 Service Tax Appeal No.70432 of 2021 regards electricity consumed in common areas or for operating the lift during shutdown, the corresponding expenses are charged by way of maintenance or repair charges. We find that the issue regarding liability for payment of service tax on supply of electricity generated through DG set in case of power failure is no more res integra. This Tribunal in the case of ICC reality India (P.) Ltd. Vs. CCE, Pune reported in 2013 (32) S.T.R. 427 has held that service tax cannot be charged on electricity charges collected from the tenants. Para 9 and para 10 of the said order reads as under: -
"9. .....".
4.20. In view of the aforesaid decision of Tribunal, we hold that service tax cannot be demanded on supply of electricity through D G Set. Accordingly, demand on this count is set aside alongwith setting aside of penalty."
4.7 The reasoning adopted by the Commissioner (Appeal) in the impugned order for dropping the demand in respect of DG Charges is identical to the reasoning adopted in the above decisions. The argument advanced by the revenue in their appeal that the DG Charges collected were towards supply and distribution of the electricity at the time of break down, is having no basis in law. Appellant had generated the electricity at the time of power break down using the DG Sets and had supplied the same to their tenants using the same network available in the mall by which the electricity from PUVVNL was distributed in normal case. The only difference being that the electricity fed to the net work was the electricity generated by use of DG Sets by the appellant. Thus we do not find any merits in the appeal filed by the revenue on this ground.
4.8 Now we come to the issue in respect of DGAC charges. The contention of appellant is that these charges were towards the electricity generated and used by them for providing the air conditioning to their tenants in case of the breakdown of the supply of electricity by the PUVVNL. In fact the submission of Service Tax Appeal No.70012 of 2020 & 22 Service Tax Appeal No.70432 of 2021 appellant is that these charges should be considered on the same footing as DG Charges. We do not find any merits in the submission made by the appellant. The service provided by the appellant has been provided by the appellant in terms of the rent agreement made by them with their tenants and was not the service of supply of electricity. Extracts from the rent agreement with M/s Future Retail Ltd and the Minutes of meeting are reproduced below:
"4.6- Common Area Maintenance 4.6.1. During the Term of this Lease Deed, the Lessee shall also pay to the Lessor or such facility management company as may be appointed by the Lessor, the following user charges, in respect of management, maintenance and upkeep of the said Mall (hereinafter referred to as "CAM Charges"). The said CAM Charges shall be in consideration for the following of the Common Areas:
(i) Housekeeping /sanitation services of the Common Area;
(ii) Electricity /water charges for Common Area;
(iii) Overall Security of the said Mall;
(iv) HVAC for Common Area;
(v) Electricity for Common Area;
(vi) AMC's for plants, machinery, facilities and
amenities provided in the said mall excluding the Demised Premises;
(vii) Maintenance of lifts, escalators and other utilities in the said Mall excluding the Demised Premises including AMC for the same;
(viii) Civil, plumbing, structural and all other repairs, replacements and maintenance in the said Mall not including Demised Premises;
(ix) Maintenance and upkeep of the said Mall not including the Demised Premises;
Service Tax Appeal No.70012 of 2020 & 23 Service Tax Appeal No.70432 of 2021
(x) Facility Management Company's fees/ charges;
(xi) Spares & consumables required in the Common Area; and
(xii) Horticulture / garden / Common Area usage charges.
4.6.5- The Lessor shall be responsible for providing assured power supply to the Demised Premises during the Mall Timings subject to the Lessor being in compliance with its obligations under this Lease Deed. The Lessee shall pay for the consumption of electricity and Air-conditioning charges.
"5. Obligations of the Parties 5.1. The Lessor shall, at all times during the Term, at its own cost, comply or cause compliance with the following:
(iii) provide essential facilities, utilities, services like power from UPPCL, Air- Conditioning, DG Power, 24 hrs water supply etc. for the Demised Premises, as required by the Lessee for the purposes of operating and managing the Demised Premises, 3.1.1 Further, Annexure-"B" to the Lease Deed mentioned the "Equipments and Infrastructure provided by the Lessor", including as under:
Clause 2.4 - 100% back up through DG sets with AMC's and synchro panels nos. and size as specified by the Lessee has been provided. DG has been provided with acoustic enclosures and adequate ventilation and smoke stacks in accordance with state pollution control board norms.
Clause 4- HVAC 4.1- Central air conditioning with chilled water systems has been provided.
Extract from Minutes of Meeting dated 23-07-2013:
Service Tax Appeal No.70012 of 2020 & 24 Service Tax Appeal No.70432 of 2021 "1. DG Unit rate: Bills raised by Atlantis @ Rs. 18 per unit, agreed to revise @ Rs. 16.50 per unit with effect from 13 May 2013 which is in line with the earlier discussion and agreed rates held on 19th January between the FG and Atlantis mall representatives.
2. EB Board unit rate to be charged from Big Bazaar once the Mall gets a power connection from UPPCL will be Rs. 8.50 per unit including fixed demand charges. Electricity duty or any other charges charged by UPPCL on account of electrical energy from Atlantis. Big Bazaar will also pay 10% for T&D losses, maintenance charges and all other expenses incurred by mall on this account. Any further revision (upward/ downward) in diesel rates will be calcu!ated/ charged in the same proportions
3. Air Conditioning charges which is currently paid @Rs 16 PSF by Big Bazaar will be reduced to Rs. 12.50 PSF from the date of Mall getting a power connection from UPPCL.
4.9 From the terms of clause 4.6.1 of the lease agreement it is apparent that the appellant collected user charges towards management maintenance and upkeep of the Mall, referred to as Common Area Maintenance (CAM) charges in consideration for services including electricity and HVAC charges, besides other services for common area. They pay service tax on such CAM charges recovered from lessee under the category of "Management Maintenance & Repair services" in their ST3 returns. They have collected DG charges and DGAC charges for providing services of power back up through DG sets and Air conditioning services through HVAC plants for demised premises by raising separate invoices titled "DG charges" and "DGAC charges" respectively. They have collected the above charges in terms of clause 4.6.5 and 5.1 (ii) of the same lease deed agreement. The services provided in respect of common area and demised premises are identical. While providing un-
interrupted power supply through DG sets and air conditioning Service Tax Appeal No.70012 of 2020 & 25 Service Tax Appeal No.70432 of 2021 services through HVAC plant as per terms of lease deed, For providing these services appellant has recovered additional charges in form of DG Charges and DGAC Charges, which are in form of running expenses, repair & maintenance, diesel purchase etc. By utilizing all these input and input services, they have provided output services of power backup/ air conditioning services. The services provided by the appellant against the DGAC charges are towards the air conditioning of the demised premises do qualify the definition of Service as per Section 65 B (44) of the Finance Act, 1994, effective from 01.07.2012. These services are distinct from the services of supply of electricity and cannot be said to be on the same footing in as much as air conditioning is not specified under the Central Excise Tariff or the VAT Act, for which the appellant could have claimed the same to be good or deemed goods. The terms of agreement referred above and the facts of the case, lead to the conclusion that the appellant have provided the air conditioning services for which they have received the consideration as DGAC charges. The decision of the Delhi Bench in the case of Varun Estates [Final Order No. 51508 /2023 dated 10/10/2023] is clearly distinguishable as the appellant has collected certain charges towards supply of electricity and for providing the air conditioning services and reimbursed the same to electricity department. Tribunals holding that these charges are reimbursable charges have held in favour of the appellant. However in the present case these charges are collected as consideration for providing the air conditioning services to the tenants of the appellant and cannot be said to be reimbursable expenses. Thus we do not find any merits in the submissions made by the appellant in respect of the charges collected by the appellant under the category of DGAC charges for providing air conditioning services. Impugned order cannot be faulted on this account.
4.10 Revenue has challenged the impugned order to the extent it has dropped the demand made by invoking the extended period of limitation. Impugned order records that the charge of Service Tax Appeal No.70012 of 2020 & 26 Service Tax Appeal No.70432 of 2021 suppression cannot be upheld in view of the audit undertaken by the department. It has relied upon the decision in the case of Trans Engineers India Pvt. Ltd. [2015 (40) STR 490 (T-Mum)] wherein following has been held:
"10. In our view the entire demand is to be set aside on the ground on limitation only. Revenue authority cannot invoke the extended period of limitation, when the records of the assessee were audited by the officers once but did not find any short-payment from records. The 2nd audit party, doing the audit of same period or over lapping period, cannot allege that appellant has misstated or suppressed the facts from the departments. We find that the Hon'ble High Court of Bombay in the case of Rajkumar Forge Ltd. - 2010 (262) E.L.T. 155 (Bom.) held in paragraph No. 13.
"13. It is an undisputed fact that insofar as the petitioners are concerned, audit of the petitioners' factory was carried out on three dates, i.e., 6th September, 1993, First November, 1995 and 2nd September, 1994. The petitioners vide their letter dated 6th September, 1993 have recorded the visit of the audit party and have also replied to the audit objections raised by the said audit party in respect of scrap generated and have informed the authorities that they were debiting Rs. 80,000/- at the rate of Rs. 1,000/-per Metric Ton and that they were also debiting differential duty totalling to Rs. 63,318/- in respects of Mill Rollers which was debited under PLA dated 3rd September, 1993. Therefore, the petitioners vide their letter dated 5th July, 1995 have informed the Superintendent of the respondents that they had debited Rs. 2,08,760/- against the Scrap Generation at sub-contractor end, where material is sent for processing under Rule 57F(3) for the period January, 94 to March, 95. Therefore by the said letters the petitioner had made the respondents aware of the payment of duty on the scrap as well as on the Mill Rollers and considering the fact that the respondents had carried out audit on the dates mentioned herein above, the sad fact is conclusive insofar as the Service Tax Appeal No.70012 of 2020 &
27 Service Tax Appeal No.70432 of 2021 knowledge of the petitioners' activities to the respondents is concerned. Therefore, in our view, in the light of the audit carried out by the respondents off the petitioners' factory and the correspondence that is addressed by the petitioners to the respondents, it cannot be said that the petitioners have mis-stated the facts or there is a fraud practiced by the petitioners."
11. The abovesaid views are also relied on by the Hon'ble High Court of Karnataka in the case of MTR Foods Ltd. (supra). We reproduce the relevant paragraph :-
"4. As is clear from the material on record, the returns were filed promptly. In the returns it is clearly mentioned that they availed credit under the aforesaid rules. The audit partly accepted the same. It is only in the second audit that they noticed the mistake and initiated proceedings. Therefore, in the light of the aforesaid facts none of the other conditions prescribed in the proviso exists in this case to extend the period of limitation of 5 years. It is in this background the Tribunal was justified in setting aside the order passed by the appellate authority and in restoring the order passed by the original authority. Therefore, there is no merit in this appeal. Accordingly, it is dismissed."
12. In view of authoritative judicial pronouncements and in the facts of this case, extended period cannot be invoked for demanding service tax from the appellant. The demand being beyond the period of limitation, we set aside the entire demands. Consequently, the interest and the penalties imposed are also set aside.
4.11 Apart from what has been observed in the impugned order we also find that the demand is made on the basis of the rent agreement entered between the appellant with its tenant. This agreement was the basis for paying the service tax by the appellant under the category of renting of immovable property services. Appellant had been paying the service tax under this Service Tax Appeal No.70012 of 2020 & 28 Service Tax Appeal No.70432 of 2021 category and were also filing the ST-3 returns. When this agreement was in the knowledge of the department and the appellant had been paying service tax on some of the services provided under the same agreement, they cannot be said to have suppressed the other contents of agreement with intent to evade payment of taxes. Revenue cannot hold that the part of agreement was suppressed with the intent to evade payment of taxes. Thus we do not find any merits in the appeal filed by the revenue challenging the impugned order on this account.
4.12 As we find no merits in the appeal filed by the revenue on the account of invocation of extended period of limitation, we also do not find any merits in challenge to the dropping of penalty under Section 78.
4.13 In view of the discussions as above we do not find any merits in the appeals filed by the appellant and revenue.
5.1 Service Tax Appeal No 70112 of 2020 filed by the appellant is dismissed.
5.2 Service Tax Appeal No 70432 of 2021 filed by the revenue is dismissed.
(Order pronounced in open court on- 01st May, 2025) Sd/-
(AJAY SHARMA) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp