The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in the case Nai Dunia Media Pvt. Ltd. Versus Commissioner of Central Goods & Service Tax and Central Excise observed and has held that the service tax is not payable on the amount received as facility charges as it was wholly attributable to electricity expenses and the same have been shared proportionately by the assessee and its sister concerns.
The bench comprising of Judicial Member, Anil Choudhary in the case observed that the electricity is a good and not a service. Thus, it being outside the scope of electricity.
In the present case, the appellant/assessee are the publishers and printers of newspapers and are registered with the Service Tax Department for providing a taxable service of renting out immovable property. Thus, there are other companies, under the same group or management. However, all the companies are located in the same office building or factory premises.
The main issue in the case raised was weather the facility sharing charges amounting to Rs. 1,73,50,000 were reimbursement of electricity expenses and are not includible in the taxable value.
It was held by the appeal, commissioner that part of the facility-sharing charges was as per the agreement. There being a fixed charge per month for sharing all the facilities or the electricity charges, which were charged separately because they were variable according to usage but still a part of facility-sharing agreement remained. It was also held by the court that the reimbursement or recovery of electricity charges would be part of the provision of service.
Further, it had been argued by the appellant that the total amount received as per the Profit & Loss Account from the year 2008–2009 to the year 2011–2012 was the sharing of electricity charges or reimbursement of proportional electricity expenses to the appellant because the electric supply metre is in the name of the appellant.
However, the appellant contended on the basis of the sub-meter, the electricity bill is bifurcated between the various entities under the same management and there being no element of service involvement. Under CETA, electricity is a good chargeable to central excise. It has also been argued by the appellant that an extended period of limitation is not invokable, as all transactions are properly recorded in the books of accounts maintained in the normal course of business. Hence, the issue is wholly interpretational, and an extended period is not invokable.
It has also been noted by CESTAT that the amount has been paid by the appellant of electricity consumption on the basis of the bill generated by the Madhya Pradesh Electricity Board. The electricity is also being share by the appellant in the name of facility sharing. Therefore, the appellant acted on behalf of their tenant and paid the electricity charges to a third party. As the appellant is providing the service of Renting of Immovable Property along with “Facility Sharing Service.”
Accordingly, the assessee’s appeal was allowed by the CESTAT.
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