To qualify as ‘gross amount charged’ there must be a payment and it must be in the nature of a consideration for a service. The Tribunal in the case of Reliance Infratel Ltd v. Commissioner has held that amount for ‘lease equalisation levy’ which had been entered in the books of accounts of the assessee to show amortisation of the asset is not a payment and neither a consideration nor gross amount charged. Thus, the assessee was not liable to pay service tax on the same.
As per the schedule of payment, the actual lease rent in the initial years was lesser than the later years. To comply with AS-19, the assessee had shown a notional amount under ‘Lease rent advance/equalisation’. The department argued that even book adjustments could be a method of payment and service tax was payable on the amount of equalisation also.
However, the Tribunal did not find force in this argument and agreed that ‘lease equalisation levy’ is not income and is also not a payment actually received or receivable.