Renting of immovable property - vacate land - liability of service tax

[Asked by Guest]

Under Renting of immovable property, Vacant Land leased to a person who inturn construct a hotel and carryon the hotel business. In this case the Hotlier pays rent only towards the land and not on the Hotel. In my view the rent received towards vacant land is also liable to tax under the above head inasmuch as levy of service tax on vacant land is excluded only in specified circumstances such as vacant land let out for Agriculture, aquaculture, etc. Please give your views on this.

Rent received towards vacant land is liable to tax under the Reneting of immovable property on the ground that the land use in course or in furtherance of business and commerce

Vacant land used for purposes specified alone is not liable for service tax. When the building is constructed by the lessee on the vacant land and used for business purposes, then the amount received towards renting of vacant land also would be liable for service tax.

AI Summary

Service tax on vacant land applies when the lessee erects and uses premises for commercial business.
Rent for vacant land is excluded from renting-of-immovable-property taxation only in specified uses such as agriculture or aquaculture. If a lessee constructs a building on vacant land and uses it for commercial purposes, rent received for that land is deemed to be for property used in the course or furtherance of business and is liable to service tax.