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 the exemption limit. The Tribunal set aside the Service Tax demand, citing previous cases and emphasizing individual tax liability for service providers and recipients. The appeals were allowed, providing consequential relief to the appellants.

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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.

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