6.
Sh.Chadha Ji,
No exemption is available to Govt., Local Bodies and Govt. authority for renting out immovable property. AAI is thus falls under the definition of Govt.for the purpose of ST. but if any Govt. organisation/,institution charges rent (whatever amount may be) it is called business/ commercial activity. For business activity, no exemption is available to Govt.
Now here situation is somewhat different for you. If Govt. (may be Govt. Authority or local body) provides service of renting out immovable property to business entity, then Reverse Charge Mechanism is applicable. That particular business entity is required to pay 100% ST as service receiver.In that situation, business entity is eligible for threshold exemption limit of ₹ 10 lakhs under Notification No.33/12-ST read with Serial No.6 of Notification No.30/12-ST dated 20.6.12 as amended vide Notification No.18/16-ST dated 1.3.16. The words, "by way of support services" stand omitted w.e.f. 1.4.16. Also read Point No.10.2 & 11.4 of Board's D.O. F. No. 334/8/2016-TRU, dated 29-2-2016 which are extracted below:
"10.2 The liability to pay service tax on any service provided by Government or a local authority to business entities shall be on the service recipient. Consequently, notification No. 30/2012-S.T. is being amended so as to delete the words ‘by way of support services’ appearing at Sl. No. 6 of the Table in the said notification with effect from 1st April, 2016. Further, 1st April, 2016 is being notified as the date from which the words ‘by way of support services’ shall stand deleted from paragraph 1, clause A(iv), item (C) of notification No. 30/2012-S.T.
The above changes shall come into effect from the 1st day of April, 2016."
"11.4 At present, support services provided by Government or local authorities to business entities are taxable under reverse charge mechanism that is the liability to pay service tax on such services is on the service recipient. With effect from 1st April, 2016, any service (and not only support services) provided by Government or local authorities to business entities shall be taxable. Consequently, 1st April, 2016 is being notified as the date from which the word “support” shall stand deleted from rule 2(1)(d)(i)(E) of Service Tax Rules, 1994 so as to provide that the liability to pay service tax on any service provided by Government or local authorities to business entities shall also be on the service recipient on reverse charge basis."
In view of above, no exemption is available. It is statutory duty of Service Provider to collect ST from Service Receiver and deposit with the Central Govt.in terms of Section 68 (1) of the Finance Act. In my view AAI is charging ST correctly from your organization.