On Wednesday the Supreme Court put a stay on the judgement of CESTAT which had confirmed under the head of “service management, maintenance or repair of immovable properties” levy of Service Tax on parking facility provided in shopping malls by entities.
Metropolitan Event Management (the appellant) operates parking areas in five malls and collects fees for the same. For the collection of this fees a third party has been appointed. The third party collects the fees and raises invoice for cost of operation and management, charges Service Tax on this amount and pays the rest to the appellants. It is contended by the appellants that the parking fees belongs only to them and nothing is given to the mall owners. They claim that there is no written contract with the mall owners for the parking area.
Audit of the appellant was done by the Service Tax Department and on that basis a show-cause notice was issued which alleged that the activity of the appellant fell under the head of management, maintenance or repair.
CESTAT upheld the Service Tax demand and stated that it cannot be accepted that the appellant was given the parking space to operate without any agreement or consideration.
A statutory appeal was filed in the Supreme Court under Section 35L of the Central Excise Act, 1944.
The appellants claimed that their activity is an operation which is different from management. It was also argued that the nature of the activity was misconceived by CESTAT.
They challenged the order of the tribunal that providing parking services is exempt, but, the Revenue is trying indirectly to tax a service which is already exempt by putting it under an inapplicable head.
The Advocates for the appellant submitted that the order of the tribunal cannot stand as the appellant is not providing any services to the mall nor have they received any consideration for a service from the mall owners.
The bench heard the submissions, directed the stay of the order and issued a notice to the Revenue authorities.