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of <h1>Market Yard Rentals Taxable Under Finance Act: Exemption Rejected, Penalties Waived</h1> <h3>M/s Flower Marketing Committee, M/s Agriculture Produce Marketing Committee, M/s Fish Poultry and Egg Marketing Committee Versus CCE, Delhi – I</h3> M/s Flower Marketing Committee, M/s Agriculture Produce Marketing Committee, M/s Fish Poultry and Egg Marketing Committee Versus CCE, Delhi – I - 2019 ... Issues:1. Whether the appellant's activity of renting phars/sheds to traders is subject to service tax under the category of renting of immovable property.2. Whether the appellant's activity falls under the negative list of services exempted from service tax under Section 66D of the Finance Act, 1994.3. Whether the extended time period for demanding service tax and penalty under Section 78 of the Finance Act, 1994 are applicable in this case.Analysis:1. The appellant, a market body facilitating flower sales, rented land in Gazipur market yard to traders. The Department issued show cause notices alleging renting of immovable property subject to service tax. The appellant contended the land was provided for temporary structures, not renting immovable property. The Tribunal found the activity met the definition of renting immovable property under Section 65(105)(zzzz) of the Finance Act, taxable as such.2. The appellant argued for exemption under Section 66D(a) and (d) of the Finance Act. The Tribunal determined the appellant did not qualify as a local authority under Section 66D(a) and the rented shops did not fall under the exemption for agricultural activities in Section 66D(d). Thus, the activity of renting phars/sheds for trading flowers was taxable as renting of immovable property.3. Regarding the extended time period for demanding service tax and penalty under Section 78, the Tribunal found no intention to evade service tax, citing a Supreme Court judgment. It held the extended time provision and penalty were not applicable due to genuine confusion about service tax liability. The appeals were allowed, directing confirmation of service tax for normal demand period without imposing penalty under Section 78.This judgment clarifies the taxability of renting immovable property for commercial activities, the applicability of exemptions under the Finance Act, and the criteria for invoking extended time provisions and penalties under Section 78.
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