2016 (3) TMI 621 - AT - Service Tax

Service Tax Dispute: Judgment on Stay Application for Renting of Immovable Property Service

The judgment addressed a stay application against the confirmation of a service tax demand of Rs. 34,53,54,680 for Renting of Immovable Property Service. ... Waiver of pre-deposit - Renting of immovable Property Service from 19.4.2008 to 30.7.2010 - Premium received for leasing the property for continuous enjoyment - Held that:- appellant was not a part of the lease agreement and was also not the provider of the impugned service. Though the service was rendered by State Government and not by the appellant, the appellant has fairly made a good case in its favour but not entirely so. Therefore, make pre-deposit of 7.5% of the impugned service tax liability. - stay granted partly. Issues:1. Stay application against service tax demand confirmation.2. Appellant's arguments regarding lease agreement and project management fee.3. Revenue's arguments on assessable value and premium nature.4. Analysis of lease agreement and premium nature.5. Decision on pre-deposit and stay of recovery.Issue 1:The judgment involves a stay application against the confirmation of a service tax demand of Rs. 34,53,54,680 covering a specific period under Renting of Immovable Property Service.Issue 2:The appellant argued that they were to receive only 6% of the lease amount as project management fee under a tripartite agreement between the State Government and a third party. They contended that the amount received was premium and cited a CESTAT judgment exempting such premium from service tax. The appellant also claimed that the leasing of vacant land became taxable only from a later date, not covering the payments made earlier.Issue 3:The Revenue contended that any payments received before the taxable service provision should be included in the assessable value as per the Finance Act. They differentiated the nature of premium mentioned in the CESTAT judgment, emphasizing that it should be considered part of the assessable value for service tax purposes.Issue 4:The judgment analyzed the lease agreement, noting that the appellant was part of the tripartite agreement and was to receive project management fees only. It distinguished the nature of premium, stating that the premium in the case at hand was for continuous enjoyment of the property, making it qualitatively different from the premium in the CESTAT judgment. The judgment acknowledged the appellant's argument that they were not the service provider, but the State Government, and ordered a pre-deposit of 7.5% of the tax liability, staying the recovery pending compliance.Issue 5:The decision ordered the appellant to pre-deposit a percentage of the tax liability within a specified time frame, with the provision for staying the recovery during the appeal process. Failure to comply would result in the dismissal of the appeal. The judgment considered various aspects of the arguments presented by both parties and provided a balanced decision based on the circumstances and legal interpretations presented.