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One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769684 https://www.taxtmi.com/caselaws?id=769684 Absolute owner of both the gas/oxygen plants - levy of service tax on lease rentals received under the taxable category of Renting of immovable property' service - setting up of gas/oxygen plants by utilizing the equipment supplied by both the appellants as well as ISPAT would be considered as 'immovable property', in order to fall within the scope and ambit of 'Renting of Immovable property' or not - scope of the phrase 'immovable property' as per the Explanation 1 appended to Section 65 (105) (zzzz) of the Act of 1994 - HELD THAT:- Various individual equipment of the plant are erected, installed and commissioned within the premises of ISPAT by way of fastening to the foundation by the help of nuts/bolts and through installation of the base concrete support, which can be dismantled at any time, without causing much damage to the original equipment. Since, those equipment were not permanently attached to the earth, the same seized to be considered as 'immovable property' and as such, cannot fall under the scope of the definition provided under 65 (105) (zzzz) of the Act of 1994. An identical issue about immovability of the plant came up for consideration before the Hon'ble Supreme Court in the case of Solid & Correct Engineering & Ors. [2010 (4) TMI 15 - SUPREME COURT]. The issue arose in that case for consideration was, whether erection of plant at site would be considered as 'immovable' or 'movable'. By referring to the provisions of Section 3(26) and 3(36) of the General Clauses Act, 1897, the Hon'ble Supreme Court had prescribed the test, through which it can be ascertained, whether the plant is 'immovable' or 'movable'. The ratio of the above judgement is squarely applicable to the facts of the present case. In the present case, the fact that the gas/oxygen plants in question, were not fixed permanently to the earth and are embedded to the earth only for the purpose of providing stability and to keep their operation vibration free, is evident from the affidavits sworn in by the officers of the appellant's company, certificate of the chartered engineer and shifting of the same plants in case of other buyers to another place(s) upon completion of the contract period. Further, it is also an admitted fact on record that the appellants have been paying VAT on the lease rental charges since 2004-2005, before coming into force of the entry of taxable service of 'renting of immovable property'. Since, payment of VAT was accepted by the concerned statutory authorities as due discharge of the liabilities, it would not be prudent on the part of another authority to claim the tax amount under different head, considering the transaction as 'service'. In Section 65(90a) ibid, the phrase 'immovable property' has not been considered to explain, as to which of the properties would fall within its ambit for consideration as the service, under the taxable entry of 'renting of immovable property'. Similarly, in the sub-clause (zzzz) in clause (105) of Section 65 of the Act of 1994, though the activity of renting of immovable property is finding place, but the constituents of the immovable property have not been spelt out therein. However, the Explanation 1 was appended to such sub-clause (zzzz), providing that various properties cataloged thereunder should be considered as 'immovable property' - Since, the sub-clause (zzzz) has not provided as to which of the properties would be contemplated as 'immovable', such vacuum was remedied by way of providing the various category of properties for consideration as 'immovable' in nature in the said Explanation 1. In view of the fact that the said Explanation clause has considered only a 'building', 'land', 'facilities relating thereto', in our considered view, no other property can be included therein for consideration as 'immovable property'. The legislative intent is manifest that the scope of the main section for understanding the meaning of 'immovable property', should only be confined to those prescribed properties, which are itemized in the said explanation clause. In other words, any other property(ies) not conforming to the prescribed properties should fall outside the scope and purview of consideration as 'immovable' for the purpose of the Act of 1994. Therefore, the type of properties mentioned in the Explanation - 1 were intended to be exhaustive and not extendable to any other properties, which are not appearing therein. The phrase 'excisable goods' has been defined in Section 2(d) of the Central Excise Act, 1944 to mean, 'goods specified in the Fourth Schedule as being subjected to a duty of excise and includes salt'. An Explanation was added to the said definition clause, providing that 'for the purposes of this clause, "goods" includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable'. Conclusion - i) The appellants are not absolute owners of the entire plant facilities, as the equipment supplied by ISPAT and ownership of land and civil structures vests with ISPAT. ii) The plants erected by the appellants are not immovable property, since they are not permanently fixed to the earth but only fastened to provide operational stability and can be dismantled and relocated without substantial damage. iii) The phrase 'immovable property' as per the service tax statute is limited to buildings, land, and common areas/facilities and does not include plant and machinery. iv) The lease rentals received by the appellants do not attract service tax under the category of 'Renting of immovable property' service. The impugned orders are set aside and the appeals are allowed in favour of the appellants. Case-Laws Service Tax Thu, 24 Apr 2025 00:00:00 +0530