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Judgment
This appeal has been directed against Order-in-Original No. 48-49/ST-VII/CD/2016 dated 05.12.2016 passed by Commissioner of Service Tax, Mumbai-VII. By the said order, the Commissioner has held as follows:-
"ORDER
IN RESPECT OF SCN DATED 13.04.15
(i) I confirm the demand of service tax of Rs.1,93,48,186/-(Rupees One crore ninety three lakhs forty eight thousand one hundred & eighty six only) under Section 73(2) of the Finance Act 1994.
(ii) I confirm the demand of interest on the demand confirmed at (i) above at the appropriate rate under Section 75 of the Finance Act 1994.
(iii) I imposed a penalty of Rs.96,74,093/- (Rupees Ninety six lakhs seventy four thousand & ninety three only) under provisions of amended Section 78 of the Finance Act, 1994 with an option for payment of only 25% of the amount confirmed at
(i) above as penalty, provided conditions laid down under clause
(ii) to the second proviso & third proviso to Section 78(1) of Finance Act 1994 are satisfied.
IN RESPECT OF SCN DATED 04.04.16
(v) I confirm the demand of service tax of Rs.1,05,66,073 (Rupees One crore five lakhs sixty six thousand & seventy three only) under Section 73(2) of the Finance Act 1994.
(vi) I confirm the demand of interest on the demand confirmed at (v) above at the appropriate rate under Section 75 of the Finance Act 1994.
(vii) I imposed a penalty of Rs.10,56,607/- (Rupees ten lakhs fifty six thousand six hundred & seven only) under provisions of amended Section 76 of the Finance Act, 1994 with an option for payment of only 25% of the penalty imposed, provided conditions laid down under clause (ii) to the second proviso to Section 76 of Finance Act 1994 is satisfied.
(viii) I also imposed a penalty of Rs.10,000/- (Rupees Ten thousand only) under Section 77(2) of the Finance Act, 1994 on the assessee."
2.1 The appellant was charging refundable security deposit from their tenant along with licence fee while renting immovable property. This security deposit was retained by them for the duration of the tenancy and refunded back on termination of the tenancy agreement period.
2.2 Valuation of taxable services is the gross amount charged by the service provider for service provided by them. While determining the value of taxable services, the appellant has not included the notional interest received by them on the security deposit taken by them thereby undervaluing the taxable services in contravention to the Explanation (a) to Section 67 which stated that consideration includes any amount that is payable for the taxable services provided or to be provided. Show cause notices were issued to the appellant, as detailed below:-
Sr. No.
File No.
Show Cause Notice No. and date
Amount in Rs.
1
V-Adj/STVII/VCPPL/15- 32/2015
ST VII/Dn III/Gr IV/135/VCPL/2015 dated 13.04.2015
1,93,48,186/-
2
V-Adj/STVII/VCPPL/15- 01/2016
ST VII/Dn III/Gr IV/135/VCPL/2015 dated 04.04.2015
1,05,66,073/-
The show cause notices were adjudicated by the Commissioner as per the impugned order referred to in para 1 above.
2.3 Aggrieved by the order, the appellant is in appeal before us.
2.4 We have heard Shri Bhavin Gandhi, Chartered Accountant, for the appellant and Shri Dilip Shinde, Assistant Commissioner, Authorised Representative, for the Revenue.
2.5 Arguing for the appellant, learned Chartered Accountant submits that the issue involved in the matter has been settled by this Tribunal order No. A/94140/16/STB dated 02.12.2016 in appellant's own case. Appeal filed by the Revenue against this order has been dismissed by the Hon'ble Supreme Court also. Since the issue is no longer res integra, the appeal should be allowed in their favour.
2.6 Learned Authorised Representative for the Revenue reiterates the findings of the Commissioner in the impugned order.
3.1 We have considered the impugned order along with the submissions made in the appeal and during the course of argument.
3.2 We find that the issue with regard to adding notional interest in the taxable value of the service provided was considered by this Tribunal in the order referred to by the learned Chartered Accountant in the appellant's own case. In para 5.2, the Tribunal observed as follows:-
"5.2 As regards the demand of Service Tax liability on the interest-free security deposit, we find that the adjudicating authority has calculated notional interest payable on such interest-free security deposit and related the notional interest as received in relation to "renting of immovable property" services. We are not in agreement with such finding of the adjudicating authority, for the reason that an agreement between the appellant and his customer provides for interest free security deposit, which is nothing but advance, Revenue cannot state that such security deposit will earn interest, and notional interest needs to be taxed. We find that the decision of the Tribunal in the case of Murli Realtors Pvt. Ltd. and others (supra) squarely cover the issue in favour of appellant herein as the said judgment of the Tribunal is on identical issue."
3.3 Appeal filed by the Revenue against the said order has been dismissed by the Hon'ble Supreme Court stating as follows:-
"ORDER
Delay condoned.
The appeal is filed against the impugned judgment and order No. A/94140/16/STB dated 2 December 2016 passed by the Customs, Excise & Service Tax Appellate Tribunal (for short "CESTAT"), West Zonal Bench at Mumbai in Appeal No. ST/90065/14-Mum) whereby the CESTAT allowed the appeal filed by the respondent.
We find no ground to entertain this appeal.
The Civil Appeal is accordingly, dismissed.
Pending application(s), if any, shall stand disposed of."
3.4 Since the Civil Appeal filed by the Revenue challenging the order of the Tribunal has been dismissed by the Hon'ble Apex Court stating that there are no grounds to entertain this appeal, the doctrine of merger applies the order of the Tribunal and gets merged in that of the Hon'ble Apex Court.
3.5 In view of above, the issue involved in the present case is squarely covered by the earlier decision of the Tribunal affirmed by the Hon'ble Supreme Court. We find no merit in the impugned order and set aside the same.
The appeal is allowed with consequential relief, if any.
(Order pronounced in the open court)