Co-owner-wise rent assessment prevents service tax clubbing where each share falls below the exemption threshold.

Rent from jointly owned premises must be attributed to each co-owner according to their agreed share, rather than treated as the receipt of a single collective entity. On that basis, the taxable value for service tax cannot be computed by clubbing all co-owners' rent together. Where each co-owner's share falls below the applicable small scale exemption threshold, service tax demand does not survive. The demand raised against a non-existent collective assessee was therefore unsustainable, and the rent had to be assessed co-owner-wise for exemption purposes.

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Issues: Whether rent received from jointly owned premises was liable to service tax in the hands of one co-owner by treating the entire rent as his consideration, and whether the demand could survive when each co-owner's share fell below the small scale exemption threshold.

Analysis: The property was rented out by eight co-owners under an agreement that apportioned the rent in specified shares. The demand had been raised against a non-entity described as "M/s Dineshbhai M Patel & Ors.", although the rent accrued to the individual co-owners in their respective proportions. On the facts, the total rent could not be treated as the taxable value of one person. When each co-owner's share was taken separately, the amount was below the threshold for the small scale exemption under the relevant exemption notifications.

Conclusion: The demand of service tax was not sustainable against the appellant and the assessee succeeded on the issue.

Final Conclusion: The impugned order was set aside and the appeal was allowed because the rent had to be assessed co-owner-wise, not as a combined receipt of a non-existent collective entity.

Ratio Decidendi: In a co-ownership arrangement, rent must be attributed to each owner according to their respective share, and the taxable value for service tax exemption purposes cannot be determined by clubbing all co-owners' receipts together.

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