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

Private Company Seeks Clarity on Service Tax Exemption for Residential Property Used as Guest House for Business A Delhi-based private company rented a house to another private company headquartered in Chennai for use as a guest house for officers visiting Delhi, with an annual rent exceeding 15 lakhs. The Delhi company argues that the property is used for residential purposes, thus exempt from service tax. However, they seek opinions on whether the property's use for business purposes by the Chennai company makes it liable for service tax. Responses indicate that the activity is not liable to service tax, as the building's use for residential purposes is specifically excluded from taxable immovable property.