Liability of service tax on letout property

[shyamal roychowdhury]

This is regarding service tax on letout prpperty for use as guest house . My client which is delhi based pvt co gives one of its big house to anather private co with head quater in channai on rent for for annuall rent excceding 15lacs . The rent agreement provides that the house will be used for residential purpose of officers who comes to delhi on tour . it would be comanys guest house at delhi . no other activities will there . So the company refuses to pay service tax as it claims that no service tax payable on residential purpose . but our view is that since the channi company is useing though for residential purpose for its officer while in delhi , it is definetly for used for business purpose & it satisfy the defination of rent of immoveble property . we want views & opinion on this issues . the main issue weather there will be libility of service tax ?

[Surender Gupta]

The activity would not liable to service tax.

[Guest]

I agree with the view of Shri Gupta and it is not taxable. The specific exclusion of 'building used for residential purpose' from immovable property liable for tax will over ride the general purpose of 'use in the course of in furtherance of business'.

AI Summary

Residential purpose exclusion prevents service tax on renting immovable property used as company guest house for officers. A building let as a company guest house for residential accommodation of officers is not subject to service tax because the specific exclusion for a building used for residential purpose overrides characterization as taxable renting of immovable property even if the occupier uses it in the course of business.