Supreme Court Affirms Exemption for Krishi Upaj Mandi Samiti's Rental Activities from Service Tax Post-2012.

The department's appeal against the Commissioner (Appeals) order was dismissed. The Supreme Court ruled that the activities of Krishi Upaj Mandi Samiti in renting out space/immovable property are included in the Negative List under section 66 (D) (d) of the Finance Act, 1994, exempting them from service tax liability after 01.07.2012. Consequently, the demand for service tax on the respondent for the period from October 2013 to March 2015 was set aside, affirming the exemption from tax liability.

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Issues involved:
The issue involves the appeal by the department against the order passed by the Commissioner (Appeals) setting aside the demand of service tax on the respondent for renting out space/immovable property of the Mandi Samiti to traders.

Details of the Judgment:

Issue 1: Interpretation of Tax Liability
The period involved in the appeal is from October 2013 to March 2015. The respondent, a Krishi Upaj Mandi Samiti, rented out land and shops to traders, collecting allotment fee/lease amount. The department contended that this amount constituted a taxable service of "renting of immovable property."

Issue 2: Legal Interpretation and Precedent
A show cause notice was issued proposing a demand of Rs. 66,20,222, which was confirmed by the Additional Commissioner. However, the Commissioner (Appeals) set aside the demand, citing section 66 (D) (d) of the Finance Act, 1994, and a Final Order by the Tribunal in favor of the appellant.

Issue 3: Department's Appeal
The department filed an appeal challenging the Commissioner (Appeals) order, arguing that section 66 (D) (d) of the Finance Act did not cover renting of shops or building structures, but only vacant land.

Issue 4: Supreme Court Decision
The Supreme Court's judgment in Krishi Upaj Mandi Samiti vs. Commissioner of Central Excise and Service Tax, Alwar, held that activities of Market Committees in renting out space/immovable property after 01.07.2012 are included in the Negative List, exempting them from service tax liability.

Conclusion:
Given the Supreme Court's decision and interpretation of the law, the appeal by the department was dismissed, as the activity of renting out space/immovable property by the respondent fell within the Negative List after 01.07.2012.

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