Association of persons status requires collective intent and joint management, so co-owners face separate service-tax assessment on rental shares.

Co-ownership and joint letting of undivided commercial property do not, by themselves, create an association of persons for service-tax purposes. That status requires a voluntary, consensual union pursuing a common income-generating purpose with joint management. Where co-owners hold distinct identifiable shares and rental income accrues separately to each person, collective intent is absent. Each co-owner is therefore subject to separate assessment on that person's rental share and may claim the applicable individual threshold exemption. Aggregate rental income cannot be assessed collectively as the income of an association of persons.

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Issues: Whether co-owners receiving rent from a commercial property can be assessed collectively as an association of persons for service tax on the total rental income.

Analysis: Co-ownership, including joint letting of an undivided property, does not by itself establish an association of persons. Such status requires a voluntary and consensual union for a common income-generating purpose, along with joint management. Where each co-owner has a distinct identifiable share and rental income accrues separately, the essential element of collective intent is absent. Each co-owner is consequently liable to separate assessment in respect of that person's respective rental share and may claim the applicable individual threshold exemption.

Conclusion: The co-owners cannot be assessed as an association of persons on their aggregate rental income; they are entitled to individual service-tax assessment. The finding is in favour of the assessee.

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