Water Charges collected from tenements for supply of water does not attract Service Tax under MMR Service: CESTAT directs to Re-adjudication with Submission of Documents [Read Order]

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Water charges collected by the Tamil Nadu Housing Board from tenements for the supply of water does not attract service tax under Management, Maintenance or Repair (MMR) service and directed to adjudication on the issue with the submission of the document.

The assessee-appellant challenged the Orders-in-Original passed by the Commissioner of Central Excise, Chennai-I. The appellant is a body duly constituted by an Act of the Tamil Nadu Legislative Assembly and is engaged in the construction of houses/apartments and allotting dwelling units to eligible persons.

The assessee had not registered with the Department for the services under the respective categories and had also not paid any Service Tax on such services rendered by them to various clients. A show cause notice was issued to the appellant proposing service tax demand on various services.

The appellant requested for dropping of the proceedings. During adjudication, the adjudicating authority appeared to have considered the reply filed by the assessee, who confirmed all the demands proposed in both the Show Cause Notices.

The assessee had not produced any evidence to prove that water charges are a reimbursement income shown under the category of ‘maintenance of buildings’ was only water charges collected from the tenements.

It is a well-known fact that the appellant has its account department, duly supported by accountants / chartered accountants and statutory auditors and hence, they cannot plead ignorance of the law and/or procedures prescribed thereunder.

The two-member bench comprising of Mr P Dinesha, Member (Judicial)and Mr Vasa Seshagiri Rao, Member (Technical) remitted the issue to the file of the adjudicating authority for fresh consideration. The appellant, if so advised, can file the supporting documents before the lower authority.

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