TaxTMI 
TaxTMI 
2013 (1) TMI 272
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....t or otherwise any land or building belonging to the Authority in the industrial development area on such terms and conditions as it may, subject to any rules that may be made under this Act think fit to impose." 2. They charge both one time lease charges at the time of initial handing over of the land and also charge annual lease charges at different rates for land given for different purposes. On such lease charges received, either one time or annual, the appellant has not been paying any service tax. Revenue was of the view that service tax is payable on such lease charges received as per provisions of section 65 (105) (zzzz) read with section 65 (90a) of Finance Act, 1994. So they initiated proceedings for recovery of rent received during the period July 2010 to May 2011 as per details below: S.No Description of Lease Rent Period Amount collected (In Rs.) Service Tax @10.30% (in Rs.) 01 Lease Rent Commercial (One Time) Jul 2010 to Mar 2011 1,39,79,885 14,39,928 Apr 2011 to May 2011 7,62,85,740 78,57,431 02 Lease Rent Commercial (Annual) Jul 2010 to Mar 2011 92,21,976 9,49,864 Apr....
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....red as a renting service. 8. In a nut shell the arguments of the Counsel for appellant are that the appellant is doing a statutory sovereign function and not a service and that long term lease is like sale and not akin to renting made taxable under section 65 (105) (zzzz) and hence the demand is not maintainable and his appeal should be heard without any pre-deposit of dues arising from any impugned order. 9. The Counsel argues that the name used for an activity cannot by itself determine taxability. He also argues that a circular issued by CBEC cannot expand the scope of the entry in a statute. He argues that there is no case to treat the lump sum charge made initially on a different footing as compared to annual lease charges because both the payments are in relation to the same transfer of rights. 10. Opposing the prayer the Ld. A. R. for Revenue submits that all the properties in the area leased out by GNIDA continues to belong to GNIDA. The property is given only on lease basis and not on free hold basis. The fact that the GNIDA collects annual rent shows that the property is not sold at all. He points out that the recurring charges are not collected as taxes or as se....
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....under which land is transferred. It is not clear whether all the consideration sought to be taxed is of the for the same type of transactions. So we are prima facie taking the submissions of the appellant as correct because nothing to the contrary is seen recorded in the adjudication order though the contentions were raised before the adjudicating authority also. 12. The relevant provisions in section 65 of Finance Act, 1994 are the following: (90a) "renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include - (i) renting of immovable property by a religious body or to a religious body; or (ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre. Explanation 1 . - For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immov....
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....on, tents, camping facilities. Explanation 2. - For the purposes of this sub-clause, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce; 13. The key question to be considered is whether long term lease like one for 90 years will be covered by the meaning of "renting" or "leasing" used in section 65 (105) (91a). In relation to immovable property the difference between "renting" and "leasing" is blurred. Difference between "sale" and "renting" has been traditionally clearer. But the difference is getting blurred in modern townships as new types of transfer of rights are emerging. Ownership is a bundle of several rights. Even when a property is held by an individual under a free hold title, he does not own absolute right to do whatever he wants to do with the property. His rights are progressively getting restricted due to increasing need for welfare of the society at large, as society and community living is changing. 14. The ordinary meaning of "renting" will not cover....