TaxTMI 
TaxTMI 
2022 (3) TMI 8
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....t purpose is registered with the service tax authorities. The main waste generated in the steel plant is blast furnace slag which can be used to manufacture cement. The appellant entered into an agreement with M/s Jai Prakash Associates and formed a joint venture company in the name of M/s Bhilai JVC Cement Limited [BJCL] to manufacture cement. The appellant entered into a long term lease deed with BJCL leasing 34.59 acres of open land for a 30 year period on payment of one time non-refundable premium and an annual rent. The appellant also gave on licence some buildings to BJCL to use as office. For this purpose the appellant entered into the following agreements with BJCL; (i) Long term of lease land deed executed at Bhilai on 05.06.2007 leasing 34.59 acres of land; (ii) Supplementary lease deed on 23.11.2007 which modified the locations of the leased land without altering the total area leased so as to facilitate construction of a railway siding required by BJCL; (iii) A licence agreement dated 23.11.2007 for providing buildings on temporary basis for office use of BJCL. 3. The appellant has been paying service tax under head of 'Renting of Immovable....
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....65 (105)(zzzz) to any person, by any other person, by renting of immovable property or any other service in relation to such renting, for use in the course of or for furtherance of, business or commerce. Explanation 1.-for the purpose of this sub-clause, "immovable property" includes- (i) Building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate; (v) vacant land given or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce.- but does not include- (a) Vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; (b) Vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) Land used for education, sports circus, entertainment and parki....
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.... following grounds (a) The basis on which the demand was confirmed against the appellant is factually incorrect. In para 9.8 of the impugned order the Commissioner has confirmed the demand for the period prior to 01.07.2010 by reading together the original lease dated 05.06.2007, the supplementary lease deed dated 23.11.2007 and the licence agreement dated 23.11.2007 and thereby concluding that: (i) the land has been used by the BJCL to set up plant in split locations and, therefore, the land was not a single piece of land but had split locations; and (ii) that there were buildings or structures on the land. (b) The lease of vacant land by the appellant up to 01.07.2010 does not fall under the head of "Renting of Immovable Property Service" as can be seen from the definition of Section 65 (105) (zzzz). (c) The entire exercise is Revenue neutral because if the appellant had paid service tax, BJCL would have been able to enjoy CENVAT credit on the same. (d) No interest is chargeable and no demand is imposable. (e) The computation of service tax is incorrect in service tax is held to be payable because of cum service tax b....
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....sentative for the Department reiterated the discussion and findings of the impugned order. 14. We have considered the arguments on both sides and perused the records. 15. The dispute in this case is regarding the exigibility to the service tax on the consideration received for leasing vacant land by the appellant to BJCL during the period 01.06.2007 to 31.03.2012. The show cause notice was issued on 04.06.2012. The appellant is not disputing the liability of service tax with effect from 01.07.2010 and has already paid the service tax so payable for this period. It is only contesting the penalties imposed under section 76, 77 and 78 for this period. For the period prior to 01.07.2010, it is also contesting the demand of service tax. 16. We find that the Section 65 (105)(zzzz) was amended with effect from 01.07.2010 and "vacant land given on lease or licence for construction of a building or a temporary structure at a later stage to be used for furtherance of business or commerce" has been included in this definition and hence such leases became exigible to service tax under the category "renting of immovable property service". It is undisputed that the appellant has leased ....
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....s (in particular sub-clause (b) of the exclusionary clause) in Section 65(105)(zzzz), renting of vacant land was clearly outside the purview of the taxable service, prior to 1-7-2010. 12. Introduction of sub-clause (v) in Explanation I has significantly altered and extended the scope of the taxable service, with 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 1-7-2010. 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 Explan....
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.... of business or commerce is a taxable service only from 1- 7-2010, and not so, earlier to this date." 17. This decision was followed in Greater Noida Industrial Development Authority by the Tribunal, which decision was confirmed by the High Court of Allahabad. 18. The finding of the Commissioner in the impugned order with respect to this period (i.e., prior to 01.07.2010) is that what was leased by the appellant was not vacant land but it had buildings on it. He thus viewed it as 'lease of land as land incidental to the use of building or a part of a building' which was covered under clause (iv) of Explanation -1 and NOT as 'lease of vacant land'. The relevant paragraphs of the impugned order are as follows: "9.7. Thus, one question for discussion is whether a vacant land leased on rent for setting up a factory was specifically covered in the exclusion clause of the definition of 'Renting of Immovable Property Services' during the period from 01.06.2007 to 30.06.2010. I observe that clause (iv) to the Explanation 1 of sub-clause (zzzz) of clause 105 of Section 65 of the Act specified the following exclusion categories:- "A vacant land solely used fo....
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....se was taxable. On the other hand, if vacant land was leased and there were a few structures on it, such lease was not taxable prior to 1.7.2010. 22. Further, we find from the lease deed entered into by the appellant on 5th June, 2007 with BJCL and the supplementary lease deed entered into on 23rd November, 2007 that the lease was only for the land there was no lease of any building or structure as presumed by the Commissioner. 23. The Commissioner has relied on the licence agreement dated 23.11.2007 entered into between the appellant and BJCL for providing building on temporary basis to BJCL for office purpose and erroneously concluded that this was the same as the contract for the land. Learned Counsel has shown us that this was a separate licence agreement for different premises and not located on the land which was leased. Service tax has been paid on the rent received on these buildings licensed to BJCL and ST-3 returns have also been filed. 24. We also find that the Commissioner has relied on the work order given by BJCL to M/s Kuldeep Dhiman and M/s Motilal Brothers for construction at Maroda, Sector-6, Sector-1 to demolish existing structure and construct new struc....