Service tax demand on rent for Fit Outs rejected as they're movable property, not immovable property

CESTAT Chennai held that service tax demand on rent received for Fit Outs cannot be sustained. The tribunal ruled that Fit Outs are movable property, not immovable property, and cannot be classified under "renting of immovable property service." Since the appellant had already paid VAT on the consideration received for transfer of right to use goods, and VAT and Service Tax being mutually exclusive, additional service tax demand on the same consideration was invalid. Following precedent from Ascendas IT Park case, the tribunal set aside the impugned orders and allowed the appeal.

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Issues involved:
The issue involved in this case is whether the appellant is liable to pay Service Tax on the rent received for renting out the "Fit Outs" or not.

Summary:

Facts of the Case:
The appellant, engaged in providing renting of immovable property service, had sub-let/rented out premises to tenants and collected rent as per agreements. While Service Tax was discharged for rent from premises, it was not done for rent from Fit Outs.

Arguments by Appellant:
The appellant argued that Fit Outs are not immovable property and Sales Tax/VAT was already discharged on the consideration received for renting them out. The appellant cited previous Tribunal cases supporting their stance.

Department's Position:
The Department supported the findings of the impugned orders, maintaining that Service Tax should be paid on the amount received for renting out the Fit Outs.

Tribunal's Decision:
The Tribunal noted that Fit Outs cannot be considered immovable property and Sales Tax/VAT was already paid on the consideration received for renting them out. Citing previous cases, the Tribunal set aside the demand for Service Tax on the rent received for Fit Outs, ultimately allowing the appeals with consequential reliefs.

Significant Precedents:
The Tribunal referred to previous cases involving similar issues, such as M/s. Ascendas IT Park (Chennai) Ltd. and the appellant's own case, where it was held that Service Tax and VAT are mutually exclusive, and Service Tax cannot be demanded on the same consideration received for renting movable properties.

Conclusion:
Based on the evidence and previous decisions, the Tribunal concluded that the demand for Service Tax on the rent received for Fit Outs cannot sustain and set aside the impugned orders, ultimately allowing the appeals with consequential reliefs.

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