Building owner wins tax appeal by constructing internal road, entitled to abatement per service tax rules

The appellant, a building owner, appealed against the order-in-appeal disputing the recovery of tax payable under renting of immovable property service. The appellant claimed abatement based on constructing an internal road and argued for eligibility under notification no. 24/2007-ST. The Tribunal found the appellant's claims valid, emphasizing exclusion of property tax proportionate to the abatement period for service tax calculations. The appellant was entitled to adjust excess tax paid, and the Tribunal allowed the appeal, setting aside the impugned order.

---

---

Issues:
1. Dispute over abatement of property tax in relation to service tax liability.
2. Eligibility of the appellant for setting off the cost incurred in constructing an internal road.
3. Interpretation of notification no. 24/2007-ST regarding abatement of service tax.
4. Entitlement of the appellant for adjustment of excess tax paid.
5. Assessment of property tax liability and abatement claimed by the appellant.

Issue 1 - Dispute over Abatement of Property Tax:
The appellant, a building owner, appealed against the order-in-appeal that reversed the decision to recover tax payable under renting of immovable property service. The appellant claimed abatement of &8377; 2,74,55667/- based on constructing an internal road on build operate and transfer basis. The tax authorities disputed this abatement, citing various grounds, including timing discrepancies in tax payments and abatement claims. The Revenue argued against abatement for periods before 1st June 2007 and in April 2009, postulating ineligibility due to payment dates misalignment.

Issue 2 - Eligibility for Setting Off Cost of Internal Road:
The appellant contended that the impugned order erred in attributing ineligibilities to the abatement claimed. The appellant provided details of property tax payments, service value, and corresponding tax amounts. Both parties relied on notification no. 24/2007-ST, which exempts taxable service of renting immovable property from excess service tax, based on the gross amount charged less property taxes. The appellant argued for abatement eligibility under this notification.

Issue 3 - Interpretation of Notification No. 24/2007-ST:
The Tribunal examined the appellant's property tax payments from 2004-05 to 2008-09, totaling &8377; 8,60,74,774/-. Notably, &8377; 3,99,17,748/- and &8377; 1,34,79,909/- pertained to periods after service tax imposition. The claimed abatement for October 2008 to March 2009 and April 2009 fell within eligible limits. The Tribunal found no evidence contradicting the appellant's claims and emphasized that the property tax proportionate to the abatement period should be excluded for service tax levy calculations.

Issue 4 - Entitlement for Adjustment of Excess Tax Paid:
The appellant asserted entitlement to adjust excess tax paid due to non-availment of property tax abatement under Rule 6(4C) of Service Tax Rules, 1994. The Tribunal noted that abatement should be limited to the eligible period and the extent of tax paid, observing that the excess abatement was not utilized by the appellant.

Issue 5 - Assessment of Property Tax Liability and Abatement Claimed:
Considering the appellant's compliance with property tax payments and abatement claims within eligible limits, the Tribunal found no reason to disallow the abatement. Relying on the clear provisions of the notification, the Tribunal concluded that the appellant did not avail excess abatement. Consequently, the impugned order was set aside, and the appeal was allowed.

---