2014 (9) TMI 113 - AT - Service Tax

Tribunal grants waiver in service tax dispute based on contract terms interpretation

SAS DEVELOPERS & ENGINEERS Versus COMMISSIONER OF CENTRAL EXCISE

The Tribunal ruled in favor of the applicant in an application for waiver of pre-deposit of service tax, interest, and penalty. The case centered on the ... Waiver of pre deposit - Renting of immovable property service - revenue sharing basis agreement - Held that:- As per the definition of Renting of Immovable Property as provided as under Section 65 (90A) of the Finance Act, 1994, renting of immovable property includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the Course or furtherance of business or commerce - Board's Circular dated 13.12.2011 relied upon by the Revenue provided that each case and the terms of contract may be looked into and the decision is to be taken on case to case basis. In the present case, as the agreement is on revenue sharing basis and the applicant also undertakes certain obligation, therefore, prima facie we find that the applicant has made out a case for waiver. Therefore, the amount already deposited is sufficient for hearing of the appeal. Pre-deposit of remaining dues are waived and recovery is stayed during pendency of appeal - Stay granted. Issues:Application for waiver of pre-deposit of service tax, interpretation of renting of immovable property service, reliance on terms of agreement, applicability of Board's Circular, determination of waiver eligibility.Analysis:The case involved an application for waiver of pre-deposit of service tax, interest, and penalty amounting to a significant sum. The applicant contended that the demand was based on providing renting of immovable property service. However, the applicant had entered into agreements with specific entities for selling garments on a revenue-sharing basis, arguing that the terms and conditions of the agreement did not align with the definition of renting of immovable property service. The Revenue, on the other hand, relied on the findings of the lower authority and a Circular dated 13.12.2011.The Tribunal examined the definition of Renting of Immovable Property under Section 65(90A) of the Finance Act, 1994, which includes various arrangements of immovable property for business or commerce purposes. The Board's Circular highlighted the need for a case-by-case analysis based on the terms of the contract. In this case, considering the revenue-sharing nature of the agreement and the obligations undertaken by the applicant, the Tribunal found that a prima facie case for waiver was established. Consequently, the Tribunal ruled in favor of the applicant, stating that the amount already deposited was sufficient for the appeal hearing, and waived the pre-deposit of the remaining dues while staying the recovery during the appeal's pendency.In conclusion, the Tribunal allowed the stay petition, emphasizing the importance of analyzing the specific terms of the contract in determining the applicability of service tax obligations related to renting of immovable property. The decision showcased the significance of a detailed examination of contractual arrangements and obligations in service tax disputes to ascertain waiver eligibility and stay on recovery proceedings.