Birani Safe Deposit Vaults Pvt Ltd vs Jaipur I.. on 29 September, 2023

[Cites 2, Cited by 0]

Custom, Excise & Service Tax Tribunal

Birani Safe Deposit Vaults Pvt Ltd vs Jaipur I.. on 29 September, 2023

APPEARANCE Ms. Priyanka Goel, Advocate - for the appellant. Shri S.K. Meena, Authorized Representative (DR) - for the Department WITH SERVICE TAX APPEAL NO. 50192 OF 2018 [Arising out of the Order-in-Appeal No. 365-369 (SM) ST/JPR/2017 dated 31/10/2017 passed by The Additional Commissioner, Central Excise Commissionerate, Jaipur.] M/s Ratna Sagar Safe Appellant Deposit Vaults Pvt. Ltd., B-7, Ratnasagar, 2332, MSB Ka Rasta, Johri Bazar, Jaipur.

VERSUS Commissioner, Central Goods Respondent & Service Tax, Jaipur.

APPEARANCE Ms. Priyanka Goel, Advocate - for the appellant. Shri S.K. Meena, Authorized Representative (DR) - for the Department WITH SERVICE TAX APPEAL NO. 50268 OF 2018 [Arising out of the Order-in-Appeal No. 365-369 (SM) ST/JPR/2017 dated 31/10/2017 passed by The Assistant Commissioner, Service Tax Division, Jaipur.] 2 ST/50191 OF 2018 M/s Ratna Sagar Safe Appellant Deposit Vaults Pvt. Ltd., B-7, Ratnasagar, 2332, MSB Ka Rasta, Johri Bazar, Jaipur.

VERSUS Commissioner, Central Goods Respondent & Service Tax, Jaipur.

APPEARANCE Ms. Priyanka Goel, Advocate - for the appellant. Shri S.K. Meena, Authorized Representative (DR) - for the Department WITH SERVICE TAX APPEAL NO. 50394 OF 2018 [Arising out of the Order-in-Appeal No. 365-369 (SM) ST/JPR/2017 dated 31/10/2017 passed by The Commissioner, Central Excise and Central Goods and Service Tax, Jaipur.] M/s Jyotsna Vaults Appellant 1285, Ghinsi Bhawan, Gopal Ji Ka Rasta, Johri Bazar, Jaipur - 302 003 (Rajasthan).

VERSUS Commissioner (Appeals) Respondent Central Excise and Central Goods and Service Tax, NCR Building, Statue Circle, C-Scheme, Jaipur - 302 005 (Rajasthan).

APPEARANCE Shri M.B. Maheshwari, Chartered Accountant - for the appellant. Shri S.K. Meena, Authorized Representative (DR) - for the Department AND SERVICE TAX APPEAL NO. 50665 OF 2018 [Arising out of the Order-in-Appeal No. 365-369 (SM) ST/JPR/2017 dated 31/10/2017 passed by The Additional Commissioner, Central Excise Commissionerate, Jaipur.] M/s Bardiya Safe Deposit Appellant Vaults Pvt. Ltd., B-8 & B-9, Gaurav Tower, Malviya Nagar, Jaipur.

VERSUS Commissioner, Central Goods Respondent & Service Tax, Jaipur.

3 ST/50191 OF 2018 APPEARANCE Ms. Priyanka Goel, Advocate - for the appellant. Shri S.K. Meena, Authorized Representative (DR) - for the Department CORAM : HON'BLE SHRI JUSTICE DILIP GUPTA, PRESIDENT HON'BLE SHRI P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 51400-51404/2023 DATE OF HEARING : 29.09.2023 JUSTICE DILIP GUPTA The issue that arises for consideration in all these five appeals is as to whether the Department could have charged service tax on the notional interest towards security deposit taken by the appellant against the renting of safe deposits and private lockers.

2. It is not in dispute that the appellant has paid service tax on the amount of rent received by the appellant. The period involved in all the five appeal ranges from April, 2006 to March, 2012.

3. It transpires from the records of the appeals that the appellant had rented out lockers and apart from the rent, on which service tax was paid by the appellant, the appellant also collected interest fee security amount, which amount was required to be refunded when lockers were vacated.

4. The Department believed that the notional interest earned by the appellant on the said refundable deposit was liable to be included in the taxable value of the services provided by the 4 ST/50191 OF 2018 appellant under section 67 of the Finance Act, 19941 and accordingly, show cause notices were issued to the appellants. The appellants filed a detailed reply to all the show cause notices contending that it was not liable to pay service tax on the notional interest calculated by the Department, as that would not be a consideration for the provision of a service. The reply filed by the appellants was not accepted by the department in some cases and the demands raised in the show cause notices were confirmed/dropped.

5. Feeling aggrieved, the appellants filed appeals before the Commissioner (Appeals) and the department also filed appeals. The Commissioner (Appeals) has confirmed the demand in all the appeals.

6. Ms. Priynaka Goel, learned counsel appearing for the appellant and Shri M.B. Maheshwari, learned Chartered Accountant have contended that the advances received by the appellants are in the shape of interest free security deposit and have no impact on the rental charges collected by the appellant. Thus, the amount of notional interest cannot be considered as a consideration. In support of this contention, learned counsel placed reliance upon the provisions of section 67 of the Finance Act, as it stood at the relevant time, wherein consideration was defined to include any amount that is payable for the taxable services provided or to be provided. Learned counsel also placed reliance upon a Division Bench decision of the Tribunal in Murli 1 Finance Act 5 ST/50191 OF 2018 Realtors Pvt Ltd vs. Commissioner of Central Excise, Pune- III2.

7. Shri S.K. Meena, learned authorized representative appearing for the department has however supported the impugned order passed by the Commissioner (Appeals) and has submitted that it does not call for any interference.

8. The submissions advanced by learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.

9. Section 67 of the Finance Act, as stood at the relevant time, reads as follows:

"67 (1) Subject to the provisions of this Chapter, service tax chargeable on any taxable service with reference to its value shall,-

(i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;

(ll) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iil) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.

(3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.

2015 (37) S.T.R. 618(Tri.-Bom) [16-07-2014] 6 ST/50191 OF 2018 (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed.

Explanation.-For the purposes of this section,-

(a) "consideration" includes any amount that is payable for the taxable services provided or to be provided;

(b) "money" includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value;

(c) "gross amount charged" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and 1 book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "Suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise."

10. A Division Bench of this Tribunal in Murli Realtors, while examining a similar issue, observed as follows:

"6.1 Section 67 of the Act, reproduced in para 4.1 above, clearly provides that only the consideration received in money for the service rendered is leviable to Service Tax. The consideration for renting of the immovable property is the amount agreed upon between the parties and on this amount the appellant is discharging Service Tax liability. The security deposit is taken for a different purpose altogether. It is to provide for a security in case of default in rent by the lessee or default in payment of utility charges or for damages, if any, caused to the leased property. Thus, the security deposit serves a different purpose altogether and it is not a consideration for leasing of the property. The consideration of the leasing of the property is the rent and, therefore, what can be levied to Service Tax is only the rent charged and no notional interest on the security deposit taken can be levied to tax. There is no provision in Service Tax law for deeming notional interest on security deposit taken as a consideration for leasing of the immovable property. Therefore, in the absence of a specific provision in law, as held by the Hon'ble Apex Court in the case of Moriroku UT India (P) Ltd. (supra), there is no scope for adding any notional interest to the value of taxable service rendered. Even in the excise law, under Rule 6 of the Valuation Rules, unless the 7 ST/50191 OF 2018 department shows that the deposit taken has influenced the sale price, notional interest cannot be automatically included in the sale price for the purpose of levy. In the absence of a provision in law providing for a notional addition to the value/price charged, the question of adding notional interest on the security deposit as a consideration received for the services rendered cannot be sustained and we hold accordingly."

(emphasis supplied)

11. A perusal of the aforesaid decision of the Tribunal reveals that since the consideration for leasing of the property is rent, so what can be levied to service tax is only rent and notional interest on the security deposit cannot be subjected to levy of service tax.

12. In view of the aforesaid decision of the Tribunal, it has to be held that service tax could not have been levied on the notional interest calculated by the department on the interest fee security deposit collected by the appellant.

13. Such being the position, the five orders passed by the Commissioner (Appeals) that have been assailed in the five appeals cannot be sustained and are set aside. The five appeals are accordingly allowed.

(Dictated and pronounced in open court.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK

Unlock Advanced Research with PRISMAI

Custom, Excise & Service Tax Tribunal