2012 (11) TMI 252 - AT - Service Tax

Tribunal Grants Waiver for Small Scale Industry Exemption in Service Tax

The Tribunal allowed the applications for waiver of pre-deposit of amounts, citing the applicability of the Small Scale Industry exemption and individual ... Renting out of immovable property as a taxable service - SSI exemption - aggregate value of taxable services for threshold computation - Aggregation of receipts of co-owners for computing threshold - Waiver of pre-deposit and stay of recoveryRenting out of immovable property as a taxable service - Aggregation of receipts of co-owners for computing threshold - Applicability of SSI exemption notification to the appellants who are co-owners and whether receipts must be aggregated for threshold computation - HELD THAT: - The Tribunal proceeded on the basis that the activity carried on is Renting out of immovable property which falls within taxable services. The notification granting SSI exemption is applicable by reference to the aggregate value of taxable services rendered for the purpose of determining the threshold. The Tribunal examined the notification and concluded that where each co-owner is regarded as an individual provider of the service, the aggregate value for each individual does not exceed the exemption threshold. On the prima facie materials before it, the Tribunal found that the department had treated the receipts as collectively attributable to the appellants and sought to assess them individually on that aggregated basis; however, the notification contemplates consideration of aggregate value as attributable to the assessee-provider and, on the facts as presented, the appellants could be considered within the threshold. [Paras 3, 4, 6]The Tribunal accepted prima facie that the SSI exemption applies to the appellants when considered as individual providers and that aggregation for computing threshold should not, on the available material, defeat the exemption.Waiver of pre-deposit and stay of recovery - Whether pre-deposit should be waived and recovery stayed pending disposal of the appeals - HELD THAT: - Having found that the appellants had made out a prima facie case regarding applicability of the SSI exemption and the manner of computing the aggregate value, the Tribunal exercised its discretion in favour of the appellants. In view of the prima facie conclusion on the exemption and aggregation issue, the Tribunal found that hardship and the balance of convenience warranted grant of relief in the form of waiver of pre-deposit and stay of recoveries until the appeals are finally adjudicated. [Paras 6]Applications for waiver of pre-deposit are allowed and recovery of the amounts stayed until disposal of the appeals.Final Conclusion: The Tribunal granted stay of recovery and allowed waiver of pre-deposit after prima facie accepting that the appellants, as individual co-owners and providers of Renting out of immovable property, fall within the SSI exemption threshold when their receipts are considered individually; recoveries are stayed pending disposal of the appeals. Issues Involved:Service tax liability on individuals as providers of service under Renting out of Immovable Property category.Analysis:The judgment pertains to three applications filed against a common order in appeal for waiver of pre-deposit of an amount of Rs.3,58,688/- confirmed as service tax liability, interest, and penalties under Section 76, 77, and 78 of the Finance Act, 1994. The main issue in this case revolves around the service tax liability on the individuals involved, acting as providers of service under the Renting out of Immovable Property category.The Chartered Accountant representing the appellants argued that the individuals collectively owned a building and rented out the premises to a tenant who issued separate cheques to each co-owner. The appellants claimed that the amounts received fell within the threshold limit of the Small Scale Industry (SSI) exemption as per relevant notifications. On the other hand, the Departmental Representative contended that since the property was jointly owned and rented out collectively, the service of Renting out of an Immovable Property was applicable, justifying the department's assessment of service tax liability based on the collective amounts received by the individual appellants.Upon reviewing the submissions from both sides, the Tribunal analyzed the SSI exemption Notification No. 6/2005-ST dated 01.03.2005, as amended by Notification No. 08/2008-ST dated 01.03.2008. The Tribunal noted that the exemption granted under the notification was subject to the condition that the aggregate value of taxable services rendered did not exceed the threshold limit of Rs. 10 lakhs in the preceding financial year. Considering the individual appellants as providers of the service, their aggregate value did not surpass the threshold limit, making them eligible for the exemption. Consequently, the Tribunal found merit in the appellants' case for waiver of pre-deposit of the amounts in question and granted a stay on recoveries until the disposal of the appeals.In conclusion, the Tribunal allowed the applications for waiver of pre-deposit of amounts, citing the applicability of the SSI exemption and the individual assessment of service tax liability based on the aggregate value of services rendered by the appellants under the Renting out of Immovable Property category.