Agricultural market committee's shop rentals exceed exemption threshold, liable for service tax under N/N. 33/2012-ST

CESTAT New Delhi held that letting out shops, canteens, and other premises by an agricultural market committee is liable to service tax. Following precedent in Krishi Upaj Mandi Samiti case, the Tribunal ruled that services not directly related to agriculture are taxable. The appellant could not claim exemption under N/N. 33/2012-ST as their aggregate receipts exceeded the Rs. 10 lakh threshold limit. The notification must be read in entirety, and strict interpretation applies to exemption provisions. The Commissioner (Appeals) correctly found total receipts during 2009-13 exceeded threshold limits, making them ineligible for SSI exemption. Appeal dismissed.

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Issues:
1. Whether the activity of letting out shops and other premises for various purposes is liable to service tax.
2. Whether the appellant crossed the threshold limit for exemption under Notification No.6/2005-ST.
3. Whether the appellant is eligible for Small Scale Industry (SSI) exemption benefit under Notification No.33/2012-ST.

Analysis:
1. The appellant challenged an order confirming a service tax demand for letting out shops and premises. The issue was whether such activities are liable to service tax. The Tribunal referred to a previous decision and held that service tax is applicable for renting immovable property until 30-6-2012. However, post-negative list regime from 1-7-2012, service tax was not applicable for properties leased out for storage of agricultural produce. The Apex Court affirmed this view in a subsequent case. The appellant was held liable for service tax for the post-negative period as the activities were for business purposes not falling under the Negative List.

2. The issue of crossing the threshold limit for exemption under Notification No.6/2005-ST was raised. The Adjudicating Authority observed that the total rent receipts exceeded the threshold limit of Rs.10 lakhs in the financial years 2009-10 to 2013-14. The appellant was found ineligible for exemption benefit due to exceeding the threshold limit. The appellate order affirmed this decision based on documentary evidence and the provisions of the notification.

3. The appellant contended that the rent should have been bifurcated into exempted and taxable rents. However, the provisions of Notification No.33/2012-ST mandated evaluating the aggregate value of all taxable services provided, not separately for each service or premise. The condition was that the aggregate value of taxable services should not exceed Rs.10 lakhs in the preceding financial year. The appellate order upheld the decision that the appellant was not eligible for SSI exemption benefit as the total receipts exceeded the threshold limit. The order was affirmed based on strict interpretation of the notification and adherence to conditions for exemption.

In conclusion, the appeal was dismissed, affirming the liability of the appellant for service tax and denying the exemption benefits based on exceeding the threshold limit as per the relevant notifications.

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