2015 (10) TMI 1736 - AT - Service Tax

Tribunal rules leasing vacant land for commercial use not subject to service tax

The case involved a dispute over service tax liability on leasing vacant land for commercial use. The Tribunal ruled in favor of the appellant, a port ... Renting out of immovable property - Assessee contends that they gave only vacant land which is excluded from taxable services while revenue contends that they had leased out Port land to private parties which is taxable - Assessee is aggrieved by demand of interest while revenue is aggrieved by non-imposition of penalties. Held That:- Assessee leasing out vacant land and water front, is covered under the exclusion provided in the definition of taxable service given in Section 65(105)(zzzz) - Appeal filed by revenue has no merits – Appeal of assessee allowed and appeal of revenue rejected – Decision made in the case of Mundra Port & Special Economic Zone Ltd. [2011 (9) TMI 93 - CESTAT, AHMEDABAD] and Gujarat Maritime board (supra) [2014 (7) TMI 972 - CESTAT AHMEDABAD] followed – Decided in favour of assessee. Issues Involved:Interpretation of service tax liability on leasing of vacant land for commercial use.Analysis:Issue 1: Alleged service tax liability on leasing of vacant landThe case involved a dispute regarding the service tax liability on the leasing of vacant land for commercial use by private parties. The appellant, a port trust, contended that the leasing of vacant land was excluded from taxable services as per the definition of renting of immovable property services. The revenue argued that the activity fell under the service tax net. The lease agreements showed that the appellant had leased out land and water areas for commercial exploitation by the lessee. The Tribunal analyzed the definition of taxable service under Section 65(105)(zzzz) and the exclusion clauses under Explanation 1. It was observed that the leasing of vacant land, as in this case, was covered under the exclusion provided in the definition, and previous judgments supported the non-taxability of such leases. The Tribunal held that the activity of leasing out vacant land did not fall under the category of renting of immovable property services, thus ruling in favor of the appellant.Issue 2: Contestation over service tax liabilityThe appellant contested the demand of interest, while the revenue was aggrieved by the non-imposition of penalties. The Tribunal considered the submissions made by both sides and examined the lease agreements and relevant legal provisions. It was found that the appellant had leased out vacant land, which was excluded from taxable services as per the definition. The Tribunal referred to previous judgments that supported the appellant's position and concluded that the impugned order was liable to be set aside in favor of the appellant. Consequently, the appeal filed by the assessee was allowed, and the appeal filed by the revenue was rejected. The judgment clarified the interpretation of service tax liability concerning the leasing of vacant land for commercial purposes, providing a clear legal analysis and resolution to the dispute.