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ST – Contrived interpretation that 'asset usage charge' is covered by the term 'any other service…in relation to such renting for use…' cannot be agreed to: CESTAT

By TIOL News Service

MUMBAI, SEPT 22, 2017: THE contention in the notice issued to appellant was that they, having entered into three separate transactions in relation to such service rendered to M/s Pantaloon Retail (India) Ltd., the failure to pay tax on charges for two of the components was not tenable.

The appellant does not dispute levy on charges for 'open car parking space' but challenges the inclusion of charges for 'asset usage' in the assessable value. It is the contention of the appellant that the 'asset usage' pertains to certain equipment such as generators, etc., which are leased out to recipient of the service and are subject to levy under the Value Added Tax Act (VAT) of the State Government; consequently, according to them, the provisions of the central levy would not apply on such receipts.

It is also the contention of the appellant that the service tax on 'Renting of immovable property' in relation to the enclosed space as well as open car parking having been discharged, along with interest, before May 2012, they are entitled to the benefit of section 80(2) of Finance Act, 1994 incorporated by FA, 2012.

The appellant is before the CESTAT against the confirmation of demand of service tax of Rs.12,08,419/- and imposition of penalties and interest.

The Bench observed that the claim of the appellant in relation to the discharge of tax liability in respect of "Renting of Immovable Property" is valid. Inasmuch as penalty stands waived in view of section 80(2) of the FA, 1994.

As regards the inclusion of "charges for asset usage" in the gross value, the CESTAT observed that the 'contrived' interpretation by the lower authority of the term 'any other service…in relation to such renting for use in the course or furtherance of business or commerce' to cover any activity remotely related to the property without considering its nature, cannot be agreed with.

Relying on the decision in Sujala Pipes Pvt. Ltd - 2014-TIOL-1295-CESTAT-BANG wherein it is held that discharge of VAT liability is sufficient to exclude operation of the Finance Act, 1994 on any transaction for which a consideration is received, the demand on charges received for 'asset usage' was set aside.

The appeal was disposed of.

(See 2017-TIOL-3451-CESTAT-MUM)


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