2015 (10) TMI 296

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....of the areas within their territorial jurisdiction. The assessee was registered for the purpose of the payment of service tax on renting of immovable properties, services and sale of space for advertisement since 01.06.2007. It has been making payment of service tax on the rent received from constructed immovable properties rented out by it for business or commerce. However, the assessee did not made payment of service tax on the rent which it had received in the matter of allotment of plots of vacant land to various persons on lease for industrial and commercial purposes. With effect from 1st June, 2007, Section-65(105) (zzzz) was introduced in Finance Act, 1994. The section provides for service tax to be levied on service provided to a person by any other person of renting of immovable property or any other service in relation of such renting for use in course of, or for furtherance of business or commerce. Explanation-I to Section-65(105(zzzz) defines immovable property and it provides,- ******************** (zzzz) to any person, by any other person in relation to renting of immovable property for use in the course or furtherance of business or commerce. Explanation 1.-- For....

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....rance of business or commerce" include use of immovable property as factories, office buildings, warehouse, theaters, exhibition halls and multiple use building. Explanation-II to this Section clarifies that for the removal of doubts, it is hereby declared that for the purpose of this clause, renting of immovable property" include allowing of permitting the use of space in an immovable property, Irrespective of the transfer of possession or control of the said immovable property". The Director General of Central Excise on the material evidence collected found that the assessee has shown income from leasing of vacant land for the purpose of construction of commercial buildings, but it had not paid any service tax thereon. Accordingly, a show cause notice dated 19.03.2012 was issued to the assessee for the period 01.07.2010 to 31.05.2011, whereunder it was disclosed that the appellant received a total amount of Rs. 40,14,15,820/- as lease charges from the allotment of various plots of land for commercial purposes on which service tax was payable. The assessee was, therefore, called upon to pay service tax including education cess to the tune of Rs. 4,13,45830/- along with interest.....

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....alty upon the assessee under Sections 77 and 78 has been set aside. The order in original dated 30th April, 2013 has been set aside and the matter has been remanded to the Commissioner for de-novo adjudication in light of the order of Tribunal. The department being aggrieved has filed the present central excise appeal. Clause (v) to the Explanation 1 added under Finance Act, 2010 to Section 65(105)(zzzz) reads as follows:- "[(v) vacant land, given on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce;]" The excise appeal was admitted by the Court on following grounds: "(I) Whether the Tribunal has committed an error of law in holding that the renting of vacant land by way of lease or license (irrespective of the duration of tenure), for construction of building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 01.07.2010, and not so, earlier to this date? (II) Whether the CESTAT has committed an error of law in interpreting the leviability of service tax on vacant land, for construction of a building or a temporary structur....

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.... effect from 1.7.2010 and consequently vacant land given on lease or licence, for construction of a building or a temporary structure, to be used at a later stage for furtherance of business or commerce, would be 'immovable property' and renting of this immovable property would be the taxable service, since 01.07.2010. 13. In view of clear exclusion of vacant land from the ambit of immovable property prior to 1.7.2010 it cannot gainfully be contended by Revenue, that clause (v) to Explanation I (introduced in 2010), was a mere clarificatory endeavour, explicating the implicit and inherent meaning of Section 65 (105)(zzzz). Clause (v) is clearly an amendment which expands the scope of the taxable service; and prospectively. 14. Clause 75 of the Bill (which later came to be enacted as Finance Act, 2010) has proposed insertion of sub-clause (v) in Explanation I in Section 65(105)(zzzz) of the Act. The memorandum explaining the provisions in Finance Bill 2010 also indicates that the amendments are being made in the definition of 'renting of immovable property' service inter alia levy of service tax on renting of vacant land where there is an agreement between lessor a....