Lease premium on permanent transfer is not renting of immovable property; vague service classification and limitation also defeat tax demand.

A one-time premium or salami received on permanent transfer of leasehold rights was treated as consideration for transfer of interest, not rent for continued enjoyment of immovable property, so service tax under renting of immovable property did not apply. Receipts booked under Business Auxiliary Service were also not taxable because the relevant taxable clause was not specifically identified and no clear service nexus was established for the items cited. The demand was further held time-barred because suppression with intent to evade tax was not proved, so the extended limitation period could not be invoked. The service tax demand, interest, and penalty were therefore unsustainable.

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Issues: (i) Whether the one-time premium or salami received on permanent transfer of leasehold rights for a long-term lease was liable to service tax as renting of immovable property; (ii) whether the receipts shown under the head of Business Auxiliary Service were taxable in the absence of a specific classification; and (iii) whether the demand was time-barred.

Issue (i): Whether the one-time premium or salami received on permanent transfer of leasehold rights for a long-term lease was liable to service tax as renting of immovable property.

Analysis: The lease deed showed that full rights and title stood transferred to the sub-lessees, the premises were mutated in their names, and the appellant had no reversionary right after the transfer. The consideration received was only a one-time premium or salami and no periodic rent was received. A premium for transfer of interest is distinct from rent for continued enjoyment of property, and the levy on renting of immovable property applies to rent, not to a permanent transfer of leasehold interest. On the facts, the transaction was treated as a transfer of rights rather than a taxable renting service.

Conclusion: The demand under renting of immovable property was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether the receipts shown under the head of Business Auxiliary Service were taxable in the absence of a specific classification.

Analysis: For the relevant period, each receipt had to be brought within a specific taxable category. The adjudication order did not identify which clause of the definition of Business Auxiliary Service covered the impugned receipts. The breakup included electricity, legal charges, miscellaneous charges, and sundry balances written off, but no clear service nexus or statutory classification was established in the order.

Conclusion: The demand under Business Auxiliary Service was unsustainable and was set aside in favour of the assessee.

Issue (iii): Whether the demand was time-barred.

Analysis: The show cause notice was issued after 18 months, the dispute on taxability was a matter of controversy, and the demand was computed from audited financial statements. On these facts, suppression of facts with intent to evade tax was not established, so the extended period could not be invoked.

Conclusion: The demand was barred by limitation and could not be sustained.

Final Conclusion: The impugned order was set aside on merits and on limitation, and the appellant obtained complete relief from the service tax demand, interest, and penalty.

Ratio Decidendi: A one-time premium or salami received for permanent transfer of leasehold rights is not consideration for renting of immovable property, and where the taxable head is not specifically identified and suppression is not proved, the service tax demand cannot be sustained.

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