2017 (10) TMI 1190 - AT - Service Tax

Co-owners not jointly liable for Service Tax if rents are below exemption limit

The Tribunal held that co-owners jointly renting out property cannot be collectively liable for Service Tax if individual rent amounts received are below ... Renting of immovable property service - Revenue is of the view that as the appellants have collectively and jointly let out the property and total rent received on the property is more than the threshold limit as per the N/N. 06/2005-ST dt. 01.03.2005, therefore, the appellants are liable to pay Service Tax under the category of Renting of Immovable Property Services. Held that: - an identical issue came up before this Tribunal in the case of Anil Saini and Others Vs. CCE, Chandigarh-I [2017 (1) TMI 101 - CESTAT CHANDIGARH], where it was held that co-owners of the property cannot be considered as liable to pay Service Tax (jointly or severally) as the Revenue has identified the services provider and the service recipients for imposing the Service Tax liability which are individuals. Therefore, the Service Tax liability is not sustainable. The demand of Service Tax against the appellants is not sustainable as the appellants are entitled to benefit of N/N. 06/2005-ST dt. 01.03.2005 - appeal allowed - decided in favor of appellant. Issues:Appeal against demand of Service Tax for renting of immovable property services.Analysis:The appeals involved the confirmation of Service Tax demand for renting of immovable property services. The appellants collectively received rent from a property and did not pay Service Tax as the amount was within the threshold limit. The Revenue contended that the total rent received exceeded the threshold, making the appellants liable for Service Tax. The show cause notice demanded Service Tax of Rs. 2,01,938. The Commissioner (Appeals) upheld a demand of Rs. 1,03,058 along with interest, reducing penalties. The Tribunal considered the case of co-owners jointly letting out property and their individual tax liability. The appellants argued that each co-owner received rent individually below the exemption limit. The Tribunal noted that the appellants paid Service Tax for years exceeding the limit on their own. It was found that the co-owners could not be collectively liable for Service Tax, as the Revenue identified individual service providers and recipients. The Tribunal cited previous cases supporting this view and held the Service Tax demand was unsustainable, setting aside the impugned order and allowing the appeals with consequential relief.