CESTAT, CHENNAI BENCH
Chennai City Centre Holding (P.) Ltd.
Commissioner of Service Tax, Chennai
Stay Order No. 439 of 2012
Application No. ST/S/112 of 2010
Appeal No. ST/185 of 2010
JUNE 8, 2012
Chittaranjan Satapathy, Technical Member
Heard both sides. The learned advocate appearing for the appellants states that they are the owner of the impugned city centre mall where they have let out the individual shop premises for lease and rent. There are some common areas which are not maintained by the individual shop owners. As per an agreement entered into between the appellants and the individual shop owners, the common areas are maintained by the appellants. It is the contention of the learned advocate that since it is the obligation of the appellants to maintain these common areas, they are not rendering any service to anyone and, therefore, they are not liable to pay any service tax under the category of ‘maintenance services”.
2. This argument of the ld. advocate is prima facie untenable as the appellants are recovering charges incurred for maintenance of the common areas from the individual shop owners. Ld. advocate himself states that the maintenance is done through service contractors who are providing the maintenance service and are also paying service tax. Ld. advocate further states that they are recovering proportionate amount of service charges along with service tax from the individual shop keepers. In view of this position, it cannot be concluded that the appellants are doing maintenance as a part of their own obligation and they are not doing service to the shop keepers. If that was so, they would not have recovered service charges along with service tax proportionately from the shop keepers.
3. Ld. advocate also states that the recovery made not only includes maintenance charges and service tax paid thereof, but also charges for electricity and water used in the common areas. However, he is not in a position to state as to what percentage of recovery is attributable to the recovery of electricity and water charges.
4. He also states that the entire period of demand is from April 2006 to March 2008 and for the period from June 2007 to March 2008, they have paid Rs. 13 lakhs towards service tax demand minus CENVAT credit which they would be entitled if the tax is payable. He clarifies that, even for this period, the appellants are contesting the tax demand.
5. Heard ld. JCDR who states that the tax amount is payable for the entire period as they have rendered maintenance service to the shop owners and they have collected amounts from them. He fairly agrees that if the collected amount includes charges towards electricity and water, the same have to be excluded but neither the appellants have given details of this amount nor the adjudicating Commissioner has referred to any specific amounts in this regard in his order. He states that in the absence of concrete figures, the appellants may be directed to make predeposit of an appropriate amount.
6. As regards the argument of ld. advocate that they are entitled to credit of service tax paid by the service contractors engaged by them for undertaking maintenance work, he states that this requires to be examined with reference to the invoices etc., the details of which are not available in the case records. However, he states that for the period June’07 to March’08, the appellants have claimed credit of an amount of Rs.18 lakhs before the adjudicating Commissioner.
7. We have heard arguments from both sides. As stated above, prima facie, the argument of ld. advocate that no tax is payable on the ground that the maintenance was being done on behalf of the appellants themselves and that it was not a service rendered to the individual shop keepers is not tenable. If they were doing maintenance for themselves, there would not have been any reason for collecting the exact amount of service charges along with tax from the shop keepers. For the period from June’07 to March’08, the appellants have already paid an amount of Rs.13 lakhs claiming CENVAT credit of Rs.18 lakhs. As such, for the balance period, the tax demand is little over Rs.49 lakhs towards which no payment has been made. There are also no details available regarding the amount collected towards electricity and water charges along with service charges. Further, there are no details available to determine how much credit would be available to the appellants especially when they are challenging the taxability itself. Keeping all these factors in view, we direct the appellants to predeposit 50% of the balance amount of Rs.49 lakhs in cash within a period of 4 weeks from today and report compliance on 23.7.2012. This deposit will be in addition to Rs.13 lakhs stated to have been paid earlier. Subject to compliance with the above direction, pre-deposit of balance amount of tax, interest and penalty amounts shall remain waived during pendency of appeal.