Joint property owners not collectively liable for service tax on individual rental income. Precedents cited.

The Tribunal held that joint owners of a property, each receiving rent individually, are not liable to pay service tax collectively. The rental income of each individual should be assessed separately, and if it falls below the exemption threshold, no service tax is payable. Citing various precedents, the Tribunal allowed the appeals, setting aside the impugned orders and providing consequential relief. The issue was considered settled, and the appellants were deemed not liable for service tax.

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Issues Involved:
- Whether appellants are liable to service tax for renting of property jointly owned by five persons by clubbing all five persons or otherwise.

Summary:

1. Liability of Service Tax on Jointly Owned Property:
The primary issue is whether the appellants, who jointly own a property, are liable to service tax by clubbing the rental income of all five individuals or should be assessed individually. The appellants argued that each of the five individuals, as per the lease agreement with Reliance Industries Limited, is paid a specific amount of rent and thus, each should be considered a separate service provider. They contended that there is no legal entity like a Body Corporate or Association of Persons, and therefore, the rent received by individuals should not be clubbed for service tax purposes. They also claimed that the total rent received by each individual falls below the threshold limit for exemption under Notification No. 6/2005-ST dated 01.05.2005, citing several precedents to support their case.

2. Revenue's Argument:
The Revenue, represented by Shri Vijay G Iyengar, Assistant Commissioner (AR), reiterated the findings of the impugned order, implying that the rental income should be clubbed and taxed collectively.

3. Tribunal's Findings:
The Tribunal carefully considered the submissions and reviewed the records. It found that each appellant owns an equal share of the property and entered into a lease agreement independently. The rent is paid to each individual separately, making each person an independent service provider. Therefore, any service tax liability should be assessed individually. The Tribunal referenced a similar case, Neenaben R Doshi & others, where it was held that joint owners are independent in respect of their ownership shares and rental income should be taxed individually. It was concluded that if the rent received by an individual is below the exemption threshold, no service tax is payable.

4. Precedents Considered:
The Tribunal cited several judgments, including:
- Anita Singh, Pritam Singh, Prerna Singh vs. CGST, CC & CE, Dehradun.
- Sarojben Khusalchand vs. CST, Ahmedabad.
- CCEX, Nasik vs. Deoram Vishrambhai Patel.
- A. Akila vs. CCE, Trichy.
- Sanjay Kanaiyalal Motwani & Ors vs. CST, Ahmedabad.
- Shri SV Janardhanam vs. Commissioner GST & CCE, Salem.
- Shri Syed Ahamed & Ors vs. Commissioner GST & CE, Trichy.
- CCEX & ST, Allahabad vs. Luxmi Chaurasia.

5. Conclusion:
The Tribunal concluded that the appellants are not liable to pay service tax as the rental income received by each individual falls below the exemption limit. The impugned orders were set aside, and the appeals were allowed with consequential relief as per law. The issue was deemed no longer res-integra.

Pronouncement:
The judgment was pronounced in the open court on 05.04.2023.

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