Service tax on co-owned property rent must be tested co-owner wise, and blanket clubbing for threshold exemption was rejected.

Rent received from jointly owned immovable property cannot be automatically clubbed for service tax purposes by treating co-owners as an association of persons. The Tribunal noted that service tax is to be examined on the value attributable to each co-owner where rent is received proportionately, and the threshold exemption must likewise be considered co-owner wise. On that basis, blanket demand on the entire rent was not accepted, and eligibility for the exemption notification was directed to be reconsidered afresh by the adjudicating authority.

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Issues: Whether rent received by co-owners from renting of immovable property could be clubbed together for levy of service tax, and whether the appellants were entitled to reconsideration of the threshold exemption.

Analysis: The dispute turned on whether co-owners could be treated as an association of persons for computing taxable value on the entire rent collected from jointly owned property. The Tribunal followed its earlier view that service tax, being levied on the value of service rendered, cannot be fastened on the total rent by ignoring the individual share of each co-owner where rent is received proportionately and the exemption threshold has to be examined with reference to each co-owner. The matter therefore required examination of the appellants' eligibility for the exemption notification and the threshold limit in light of the earlier Tribunal decision relied upon.

Conclusion: The issue was answered in favour of the appellants to the extent that clubbing of rent for a blanket demand was not accepted, and the matter was sent back for fresh consideration of threshold exemption eligibility.

Final Conclusion: The impugned orders did not attain finality on the tax demand and the dispute was reopened for reconsideration by the adjudicating authority.

Ratio Decidendi: In the case of jointly owned property, service tax liability on renting of immovable property must be examined with reference to the rent attributable to each co-owner, and not by automatically clubbing the entire rent received from all co-owners together for threshold exemption purposes.

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