CESTAT, CHENNAI
BENCH
Tidel Park Ltd.
v.
Commissioner
of Service Tax, Chennai
and
P. Karthikeyan, Technical Member
Stay Order No. 668
of 2007
S/PD/63/2007 in S/97
of 2007
June 29, 2007
MANAGEMENT, MAINTENANCE OR REPAIR
Section 65 of the Finance Act, 1994 - Management, maintenance or repair
- Period from June, 2005 to March , 2006 - Assessee-company was receiving rent and
operations/maintenance charges separately from its tenants housed in its
building complex with appurtenant common facilities - Service tax was demanded
from assessee under category of ‘Management, maintenance or repairs’ on amount
collected by it towards operation and maintenance charges of common facilities
and shared areas for maintenance and repairs of those areas - Assessee
contended that common facilities and shared areas could not be considered to be
part of immovable property and, therefore, amount collected was not taxable -
Whether since in lease deed entered into with each tenant operation and
maintenance fee was charged in similar manner as lease rent, operation and
maintenance fee also pertained to immovable property and, therefore, assessee was
liable to pay service tax on amount so collected - Held, yes [Para 2]
>> Facts
The
assessee-company was receiving rent and operations/maintenance charges
separately from its tenants housed in its building complex with appurtenant
common facilities. During the period from June, 2005 to March, 2006, the
assessee collected an amount from its tenants towards operation and maintenance
charges for common facilities and shared areas. The Commissioner demanded
service tax from assessee on such amount under category of ‘management,
maintenance or repair’ and imposed penalties on it.
On
application, the assessee contended that shared areas and the common
facilities, in respect of which it collected separate charges from tenants,
were not a part of immovable property and, therefore, amount collected was not
taxable.
>> Held
The assessee was
liable, during the period of dispute, to undertake maintenance and repairs of
the shared areas and common facilities in the building complex, for which it
was, admittedly, receiving charges separately from the tenants. It could not be
said that the common facilities and shared areas could not be considered to be
a part of the immovable property inasmuch as it was the assessee’s
own case that it had been collecting rental and maintenance charges separately,
under lease deed from each tenant in respect of the immovable property leased
out to such tenant. In the lease deed it was found that the ‘lessee’ was bound
to pay lease rent at a specified rate per square feet, per month and a separate
fee called ‘operation and maintenance fee’ at a specified rate per square feet,
per month to the ‘lessor’. The ‘operation and
maintenance fee’ was also charged at a rate per square feet, which itself
indicated that the ‘operation and maintenance’ also pertained to the immovable
property. That fee was being collected by the assessee from its tenants during
the period of dispute and, apparently, service tax was payable on that amount.
The instant demand was within the normal period and, therefore, there was no
challenge on the ground of limitation. There was no plea of financial hardship
either. [
In the circumstances,
the assessee was liable to deposit the entire tax demanded. However, as a
lenient approach, the assessee was to be directed to pre-deposit only 50 per
cent of the service tax amount. [
P. Rajendra Kumar for the Appellant. T.C. Rajadas for
the Respondent.