2018 (6) TMI 1003 - AT - Service Tax

Tribunal grants service tax exemption to appellant for renting property under Notification No. 6/2005-ST

The Tribunal ruled in favor of the appellant, setting aside the demand for service tax on renting of immoveable property. The appellant, with total rent ... Exemption under Notification No.6/2005 ST (threshold of aggregate value not exceeding Rs.4 lakhs) - renting of immovable property service - eligibility for exemption - treatment of goods transport agency (GTA) receipts under reverse charge for determination of aggregate valueRenting of immovable property service - eligibility for exemption - exemption under Notification No.6/2005 ST (threshold of aggregate value not exceeding Rs.4 lakhs) - Appellant entitled to exemption under Notification No.6/2005 ST for renting of immovable property for the years 2007-08 to 2011-12 - HELD THAT: - The Tribunal examined the gross receipts from renting of immovable property for each financial year 2007-08 to 2011-12 and found that in each year the total receipts were below Rs. 4 lakhs. Applying Notification No.6/2005 ST, which exempts taxable services where the aggregate value of payments received in a financial year does not exceed Rs. 4 lakhs, the Tribunal held that the appellant's receipts from renting of immovable property fell within the exemption threshold. Consequently, the service tax demand confirmed in respect of renting of immovable property for the specified years was not sustainable.Exemption under Notification No.6/2005 ST applies to the appellant's renting of immovable property receipts for 2007-08 to 2011-12; the demand is unsustainable.Treatment of goods transport agency (GTA) receipts under reverse charge for determination of aggregate value - exemption under Notification No.6/2005 ST (aggregate value computation) - Receipts attributable to GTA services for which tax is payable by the recipient under reverse charge are not to be included in the aggregate value for determining entitlement to Notification No.6/2005 ST - HELD THAT: - The Tribunal relied on paragraph 3 of Notification No.6/2005 ST which specifies that, for purposes of determining the aggregate value not exceeding Rs. 4 lakhs, payments received towards the gross amount charged by a goods transport agency, for which the person liable to pay service tax is as specified under subsection (2) of section 68 (i.e., reverse charge), shall not be taken into account. Applying this provision, the Tribunal held that the value of GTA services falling under reverse charge could not be aggregated with the receipts from renting of immovable property when assessing entitlement to the exemption, and therefore such GTA receipts did not defeat the appellant's claim to exemption.GTA receipts subject to reverse charge are excluded from the aggregate value computation under Notification No.6/2005 ST and hence do not affect the appellant's exemption.Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal: the appellant is entitled to exemption under Notification No.6/2005 ST for renting of immovable property for 2007-08 to 2011-12, and GTA receipts under reverse charge are excluded from the aggregate value computation. Issues involved:Whether the appellant is liable to pay service tax on renting of immoveable property.Analysis:The appellant contended that they are engaged in providing services related to GTA service on reverse charge mechanism and renting part of their office building, with the total rent received below Rs. 4 lakhs annually, making them eligible for exemption under Notification No. 6/2005-ST. The Revenue argued that the appellant, being a deemed service provider for GTA service, is not entitled to the exemption. The Tribunal noted that the demand was upheld for renting of immoveable property service for the period 2007-08 to 2011-12, with the gross values received each year being below Rs. 4 lakhs. The Tribunal referenced the notification to determine the aggregate value, clarifying that only the value of renting of immoveable property should be considered for the exemption limit. Consequently, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.This judgment revolves around the issue of whether the appellant is liable to pay service tax on renting of immoveable property. The appellant argued for exemption under Notification No. 6/2005-ST due to their total rent received annually being below Rs. 4 lakhs. The Revenue contended that the appellant, being a deemed service provider for GTA service, is not eligible for the exemption. The Tribunal analyzed the values received for renting of immoveable property for each year, confirming that they were below the threshold. The Tribunal referred to the notification to determine the aggregate value, emphasizing that only the value of renting of immoveable property should be considered for the exemption limit. Consequently, the Tribunal allowed the appeal, setting aside the demand for service tax.