Joint ownership and separate rent shares do not create an association of persons for service tax on full rental income.

Joint ownership of immovable property and receipt of rent in definite, ascertainable shares does not by itself create an association of persons for service tax on the full rental income. The Tribunal applied its earlier view that tax is to be considered with reference to the individual co-owner's share and the service actually provided, so the demand could not be sustained on the association-of-persons basis. Because the rent was receivable separately, each co-owner's threshold exemption eligibility had to be verified independently. The matter was therefore remitted for limited verification of the applicable threshold limit and consequential relief.

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Issues: (i) Whether co-owners of immovable property leasing the property and receiving rent separately are liable to be treated as an association of persons for service tax purposes. (ii) Whether the individual co-owners are entitled to have the threshold limit and exemption examined separately, with the matter remitted for verification of the applicable limit.

Issue (i): Whether co-owners of immovable property leasing the property and receiving rent separately are liable to be treated as an association of persons for service tax purposes.

Analysis: The renting activity was found to arise from co-ownership, with rent received separately or shared according to definite and ascertainable shares. The definition of person under the service tax law was considered, but the Tribunal followed its earlier view that mere joint ownership does not by itself create an association of persons for levy of service tax on the entire rent. The Tribunal also relied on the principle that service tax is levied on the value of service actually provided by the individual co-owner, and that family or inherited ownership arrangements do not automatically assume the character of an association of persons.

Conclusion: The co-owners were not liable to be treated as an association of persons for service tax on the full rent, and the demand could not be sustained on that basis.

Issue (ii): Whether the individual co-owners are entitled to have the threshold limit and exemption examined separately, with the matter remitted for verification of the applicable limit.

Analysis: Since the rent was receivable by the co-owners individually, the question of eligibility for the threshold limit had to be examined with reference to each co-owner's share and the relevant period. The Tribunal therefore found it necessary to verify whether the individual co-owners fell within the threshold limit applicable during the disputed periods.

Conclusion: The matter was remitted to the adjudicating authority for limited verification of the individual co-owners' threshold eligibility.

Final Conclusion: The impugned orders were set aside on the association-of-persons issue, but the cases were remanded for limited verification of the threshold limit and related consequential relief.

Ratio Decidendi: Joint ownership of immovable property and receipt of rent by co-owners in ascertainable shares does not, by itself, constitute an association of persons for service tax levy on the entire rental income.

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