Joint co-owners of rented property can claim separate small scale exemption when receipts are individually identifiable.

Joint ownership of rented immovable property does not, by itself, create an association of persons for service tax purposes where each co-owner has an identifiable share, contracts and receives rent in an individual capacity, and tax is deducted separately. On that footing, the small scale exemption under Notification No. 6/2005-S.T. is available to each co-owner separately when individual receipts remain within the threshold, and the rental receipts cannot be clubbed as those of an association of persons. The note records that the demand was unsustainable and the impugned order was set aside with consequential relief.

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Issues: (i) Whether each co-owner of the rented immovable property was entitled to claim the small scale exemption separately and whether the rental receipts could be assessed as those of an association of persons.

Issue (i): Whether each co-owner of the rented immovable property was entitled to claim the small scale exemption separately and whether the rental receipts could be assessed as those of an association of persons.

Analysis: The property was jointly owned, but each co-owner held an identifiable share, executed the rental arrangement in individual capacity for the respective share, received rent separately, and had tax deducted under separate PAN numbers. The departmental case for treating the co-owners as an association of persons was not supported by any material showing such a legal entity. The dispute was covered by earlier Tribunal decisions holding that individual co-owners cannot be clubbed as an association of persons for service tax purposes and that exemption under Notification No. 6/2005-S.T. is available to each co-owner separately where individual receipts remain within the threshold.

Conclusion: The co-owners were entitled to separate exemption, the rental receipts could not be clubbed as those of an association of persons, and the demand could not survive.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief according to law.

Ratio Decidendi: Joint ownership of rented property does not, by itself, create an association of persons for service tax liability, and each co-owner is separately eligible for small scale exemption on individual rental receipts.

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