TaxTMI 
TaxTMI 
2017 (4) TMI 1087
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.... Section 12AA of Income Tax Act, 1961 and operate as a non-profit making organization. Section 6 of the Delhi Development Act specifies the objects of the appellant. The main objects are to promote and secure the development of Delhi according to plan and for that purpose, the appellant shall have the power to acquire, hold, manage and dispose of land and other property, to carry out building, engineering, mining and other operations, to execute works in connection with supply of water and electricity, disposal of sewage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto. 2. The appellants are registered with Service Tax Department under various categories of taxable services. In January 2008, the officers of Service Tax Commissionerate, Delhi conducted certain enquiry regarding service tax liability of the appellant. Upon enquiry, the Revenue felt that the appellants did not discharge proper service tax under the category of "renting of immovable property service", introduced as a taxable activity w.e.f. 01/06/2007. The Department conducted verification of records submitted by....
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....l Government and are not to be considered as lessee of the appellant. Reference was made to Rule 42 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981. Since, 2003 the appellant is engaged in sale of lands on free hold basis. The conveyance deeds, copies of which were submitted, will show that the transaction is for conveyance of free hold ownership rights of the property. The President of India (therefore the appellant) is identified as vendor and the allottee of the land is identified a purchaser. The amount paid is termed as 'consideration' for conveyance/sales of the land. In such situation, there is no scope to tax such sale as renting of immovable property ; (b) the ground rent is a charge levied by the appellant as prescribed under Delhi Development Act, 1957. The appellant is discharging their statutory function under the Act and the levy is a statutory charge. The income is maintained under Nazul - II account for, or on behalf of the Central Government. It is in the form of land revenue and cannot be subjected to service tax liability. The levy of ground rent is not for use of the land. Even otherwise, the ground rent of non-commerci....
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....ll as various penalties imposed on the appellant are liable to be set aside. 6. The learned Senior Standing Counsel appearing for Revenue defended the impugned order. First of all, he submitted that the appellants did not cooperate and submit the required documents and details of break-up figures, when called for by the Department. It resulted in the confirmation of full demand without considering the abatements or exemption, if any, applicable while arriving at the tax liability of the appellant. It is also submitted that the appellants have shown income under "sale of developed land", "sale of undeveloped land" and "ground rent". They have collected lease premium as well as ground rent while letting out the property in their control. The submissions of the appellant that the property was sold to the purchaser and there is no lease arrangement/agreement is not acceptable. The appellants did not substantiate their claim with documentary evidence. The term "leasing" has not been defined under the Finance Act, 1994. Reference can be made to Section 105 of Transfer of Property Act, 1882 which stipulates that the lease of immovable property is a transfer of right to enjoy such prope....
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....s and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, 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; - Section 65 (105) (zzzz) Note : Section 65 (105) (zzzz) has been substituted by Finance Act 2010 with retrospective effect from 01.06.2007 vide Notification No. 24/2010-ST dated 22.06.2010. Prior to its substitution, it reads as under : Taxable service means any service provided or to be provided to any person, by any other person, in relation to renting of immovable property for use in the course of furtherance of business or commerce.] WITH EFFECT FROM 01.07.2010 TO 30.06.2012 Taxable service means any service provided or to be provided to any person, by any other person, by renting of immovable property or any other service in relation to such renting of immovable property, for use in the course ....
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....gs, warehouses, theatres, exhibition halls and multiple-use buildings - Section 65 (90a). With effect from 16.05.2008 to 30.06.2012 "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 immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings; Explanation 2. - For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;....
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....ls of such tax paid in spite of the sufficient opportunities provided to them. In such circumstances, I have no alternative but to confirm the entire demand of Rs. 7,49,31,38,305/- on this account under Renting of Immovable Property Service as mentioned in the instant show cause notice and I hold it accordingly". 10. The Original Authority in respect of other 3 show cause notices confirmed various amounts of tax liability by recording that the receipts under the heads "sale of developed land", "sale of undeveloped land" and "ground rent" are appropriately classified under taxable service of renting of immovable property and accordingly confirmed the demands. 11. Regarding the quantification of service tax liability, the Original Authority observed as below :- "I also observe that the department vide several letters as mentioned in the show cause notice had asked the DDA for submission of informations i.e. details of income under various heads for the period 16.06.2005 to 31.03.2010 but the relevant informations were not provided. They were also given ample opportunities during investigation for furnishing of segregated data from the consolidated figures of 'Sale of u....
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....ctual infirmities due to non-examination of various relevant facts and also non-consideration of various legal issues before arriving at the tax liability of the appellant. Some of the very crucial issues, not adequately examined and discussed in the impugned order are : (a) commercial or non-commercial nature of land given on lease by the appellant. If both the types of lands are leased out, then split up income for taxable, commercial land ; (b) tax liability on vacant land prior to 01/07/2010. Statutory provision as applicable prior/post 01/07/2010 not analysed. [Here, reference can be made to the decision of Tribunal in Greater Noida Industrial Development Authority vs. CCE & ST, Noida reported in 2015 (38) S.T.R. 1062 (Tri. - Del.) as affirmed by Hon'ble Allahabad High Court 2015 (40) S.T.R. 95 (All.)]. ; (c) whether conveyance deeds executed by the appellant for transfer of land on 'free hold basis' without any provision for periodical lease rent can be considered as transaction in letting out. Copies of such conveyance deeds not examined for a finding. (d) service tax liability of various heads of income are taken together in summary manne....