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October 2013

2013-TIOL-1068-CESTAT-MUM Magarpatta Township Development & Construction Co. Ltd. vs. Commissioner of Central Excise, Pune-III

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Valuation – Notional interest on Interest-free security deposit, whether amounts to additional additional consideration – Held, No.

Facts:
The appellant provided renting of immovable property services and collected interest-free security deposit from the lessees for the damages, if any, caused to the property. The department contended to levy tax along with interest and penalty on the notional interest on security deposit considering it as an additional consideration for the provision of service. Relying on the decision of ISPL Industries Ltd. 2003 (154) ELT 3 (SC), the appellant contended that there was no evidence on record which proved that the security deposit in any way influenced the rent of property leased out and it was merely a presumption on part of the department.

Held:
Applying the case of ISPL Industries Ltd. (supra), the Hon. Tribunal observed that there was no evidence on record to prove that the notional interest on interest-free security deposit influenced the consideration received by the appellant and thus granted full waiver from pre-deposit.

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