Tribunal confirms service tax demand for rented properties, exempts post-2012 activities under Section 66D

The Tribunal confirmed the service tax demand for the period 2008-09 to 2011-12 concerning the renting of immovable properties but set aside the demand for the financial year 2012-13 from July to March due to the activity not attracting service tax liability post the introduction of Section 66D in the Finance Act. Consequently, the order was modified, and the appeal was partly allowed.

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Issues involved:
The issues involved in the judgment are the failure of the appellant to prosecute the appeal diligently, the service tax liability for renting of immovable properties, and the applicability of service tax with respect to renting of land for agricultural purposes.

Issue 1: Failure to prosecute the appeal diligently
The appellant failed to appear for the hearing despite clear instructions that no further adjournments would be granted. The absence was objected by the Departmental Representative due to multiple adjournments and the appeal pertaining to the year 2016. Consequently, the Tribunal proceeded with the submissions on behalf of the department.

Issue 2: Service tax liability for renting of immovable properties
A show cause notice was issued to the appellant for not discharging service tax liability from 2008-09 to 2012-13 for providing services of renting immovable properties. The demand for Rs. 11,02,834 was proposed to be recovered along with interest and penalty. The impugned order confirmed this proposal, which was further rejected in the order-in-appeal.

Issue 3: Applicability of service tax for renting of land for agricultural purposes
The demand in question was related to renting immovable property for the sale of agricultural produce. The Tribunal referred to a Supreme Court decision stating that even the license fee collected for renting immovable properties by public undertakings is liable to tax. However, post the introduction of Section 66D in the Finance Act, renting land with or without structure for purposes incidental to agriculture is not liable to tax. As a result, the demand for the period from 1st July 2012 to March 2013 was set aside, while the demand for the earlier period was confirmed.

In conclusion, the Tribunal confirmed the demand for the period 2008-09 to 2011-12 but set aside the demand for the financial year 2012-13 from July to March due to the activity not attracting service tax liability post the introduction of Section 66D in the Finance Act. The order under challenge was modified accordingly, and the appeal was partly allowed.

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