Tribunal grants waiver of service tax liability for co-owners renting out property

The Tribunal allowed the applications for waiver of pre-deposit of service tax liability, interest, and penalties confirmed against the appellants under Sections 76, 77, and 78 of the Finance Act, 1994. The issue centered on whether individuals, as co-owners of a building rented out to a bank, should be individually liable for service tax or assessed collectively. The Tribunal found that the appellants fell within the SSI exemption threshold, exempting them from service tax liability. Consequently, the waiver of pre-deposit was granted, and recoveries were stayed pending appeal disposal.

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Issues:
Service tax liability on individuals as providers of service under renting out of immovable property.

Analysis:
The judgment deals with three applications against a common order for waiver of pre-deposit of service tax liability, interest, and penalties confirmed against each appellant under Sections 76, 77, and 78 of the Finance Act, 1994. The issue revolves around the service tax liability on the individuals as providers of service under the category of renting out of immovable property.

The appellants, who are co-owners of a building rented out to a bank, argued that the amount received by them falls within the threshold limit of SSI exemption as per specific notifications. They contended that the Revenue wrongly considered the amounts collectively received by all appellants and sought to charge service tax liability individually. On the other hand, the Departmental Representative argued that since the property is jointly owned and rented out, service tax liability should be assessed collectively based on the amounts received by individual appellants.

Upon analyzing the submissions, the Tribunal found that the SSI exemption notification grants exemption from service tax per year if the aggregate value of taxable services rendered does not exceed a specified threshold. Considering the notifications and the individual appellants as providers of the service, their aggregate value did not surpass the threshold limit. Consequently, the Tribunal concluded that the appellants had established a case for the waiver of pre-deposit of amounts involved. As a result, the applications for waiver of pre-deposit were allowed, and recoveries were stayed pending the disposal of appeals.

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