Case Law Details
Shri G.Natarajan Vs Shri K. Veerabhadra Reddy (CESTAT Chennai)
The facts of the case are that appellants are the owners of ‘Citi Centre’ a shopping mall and had rented / leased out commercial space in the mall to various occupants, through lease deeds. For the renting of immovable property services, the appellants were discharging service tax liability. It appeared to the department that appellants were also required to discharge further tax liability in respect of maintenance and repair, services provided by them to the tenants / lessees for which monthly charges were collected from the latter. Show cause notices were issued to appellants for different periods, inter alia proposing demand of service tax liability in respect of amounts collected by them from the tenants / lessees for maintenance and repair charges, along with interest thereon and imposition of penalties under various provisions of law. Adjudicating authorities vide the impugned orders have confirmed these proposals. Aggrieved, appellants are before this forum
2. Today when the matter came up for hearing, on behalf of the appellant, ld. counsel Shri G. Natarajan submits that various expenses incurred by the appellants in maintaining common area of the mall are in turn claimed from the lessees as reimbursements on a proportionate basis. No profit has been enjoyed by them in this exercise. Ld. Advocate takes us to the terms of the lease in respect of maintenance charges in para-8 thereof at pages 94-97 of Appeal ST/40415/2013, to emphasize his point. Ld. Advocate submits that the amounts collected from the tenants / lessees would only be in the nature of collection of reimbursable expenses and the ratio laid down by the Hon’ble Apex Court in the case of UOI Vs Intercontinental Technocrafts Pvt. Ltd. – 2018 (10) GSTL 401 (SC) will apply.
3. On the other hand, Ld. A.R supports the impugned order. He draws our attention to para 3.1 of the impugned order to highlight that appellants have appointed a Property Manager, M/s.ETA Star Facilities Management Services Pvt. Ltd. who have been entrusted with operation, maintenance etc. and the entire onus of the maintenance and repair etc. is only on the appellant.
4. Heard both sides. We find merit in the assertions of the Ld. Advocate. Para-8 (c) of the Lease Agreement makes the situation amply clear and hence the same is reproduced for ready reference :
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OFFHAND
Quite a beneficial and favorable evelopment worthy of a conscious noting !
Should be of immense support in case of a ‘housing society’, with its managing body collecting in advance or otherwise, for meeting the actual common expenses; and, regardless of whether or not, for convenience, an external agency is engaged for the purpose.
Cross refer the Previous Posts focusing on the applicable principle / doctrine of ‘mutuality’ .