TaxTMI 
TaxTMI 
2025 (2) TMI 900
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....ants have not properly discharged the Service Tax liability in relation to these services, demand for recovery of Rs.1,94,33,169/- on RIPS Rs.36,30,661/- on the Rent advances received Rs.18,56,223/- on CICS and Rs.1,67,77,806/- on SFCS was raised. On adjudication, the Adjudicating Authority has confirmed the demand of Rs.1,94,33,169/- in respect of RIPS for the period 01.06.2007 to 31.03.2011 Rs.36,30,661/- for rent advances received by them for the period 01.06.2007 to 31.03.2011 under RIPS Rs.18,56,223/- in respect of CICS for the period 2005-06 to 2007-08 Rs.1,67,77,806/- in respect of SFCS for the period 01.06.2007 to 31.03.2011 and also imposed penalty of Rs.4,16,97,859/- in respect of these services and violations apart from appropriating certain amount already paid by the appellant in respect of SFCS. 3. The case of the department was that the appellants have entered into various agreements with some of their clients for renting out warehouses, as also open land. The department felt that in view of the topography and plot layout, the open land is nothing but land appurtenant to the covered shed/ warehouses rented out to their clients. Therefore, in view of explanation (1) t....
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.... definition of RIPS itself. Learned Advocate has also explained the layout with the help of map in respect of Sy.No.238 & 240 at IDA Vakalapudi, Kakinada. 5. On the other hand, learned AR for the department, apart from reiterating the findings of the Adjudicating Authority in the impugned order, has submitted that in view of the agreement, it is obvious that the vacant land is appurtenant to warehouses, covered under section 65(105)(zzzz) by virtue of explanation (1)(i). He has also submitted that said land is located in industrial estate as covered under section 65(105)(zzzz) by virtue of explanation (1)(iv). This is evident from the map submitted by the appellant, wherein, it is seen that said vacant industrial land is surrounded by several industrial establishments and hence, it is part of industrial estate. He has also submitted that said vacant land is given on lease for construction of temporary structures at a later stage to be used for furtherance of business as covered under section 65(105)(zzzz) by virtue of explanation (1)(v). This is obvious from the appellant's agreement with their tenant, where it was provided that tenant shall be entitled at its own cost to install ....
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....9. He has also, on going through the site plan, satellite image of the site map and the photographs, found that there is no fencing demarcating the properties let out under the two agreements except for some granite poles erected intermittently. He has also observed that godowns numbered 74 & 75 in the sketch given on page 22 of SCN were not accessible to the main road without passing through the property let out under the open yard agreement. He has also noted that the requirements mentioned in the warehouse agreement cannot be provided by the appellant without taking into consideration the common facilities like internal pathway, boundary wall and gate, etc. He has also held that ratio of the open yard to the covered area would not change the nature of open yard being appurtenant to the covered area, as also that the nature of goods stored in the warehouse and that the open yard and that the rents were paid independently to these properties would not be relevant to decide whether the vacant land is appurtenant to the warehouse or otherwise. In view of the same, he has not considered this as vacant land and rather he held that the vacant land is appurtenant to the warehouse and he....
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....suitable for 40 feet trailers, land being not low lying and free from flooding, inundation, fencing all around the premises up to 4 feet height, entrance and exit gates on the main road side, etc. Therefore, the area under covered warehouses can be accessed and optionally utilized only with these facilities when the vacant land is also used in conjunction with the closed warehouse. Interestingly, the agreement is for covered warehouse approximately measuring 20,000 Sq Meter subject to certain conditions. In Annexure-2 to the agreement, there are minimum requirements of closed warehouse like there should not be any high/low tension overhead lines, which obstructs movement of cranes and other MHEs and some of the other conditions discussed above. In addition, there is specification for covered shed, which also provides for sidewalls with bricks, lighting in close warehouses to ensure safe working, proper painting inside and outside, tube lighting, minimum two entries to be provided in each ends, gates collapsible shutters, etc., as well as amenities including parking facility for trucks and trailers. Therefore, a conjoint reading of the terms and conditions of these two agreements wo....
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....nts have a case because if there was no building at the time of leasing out the vacant land and if it was given prior to 01.07.2010, then there would not be any demand. The fact that they have constructed a building before hand, which was also let out to M/s Avnash Automobiles Pvt Ltd is also not clear. Therefore, this factual aspect needs to be examined by the Adjudicating Authority subject to appellant submitting the evidence to the effect that there was neither a building on the vacant land at the time of leasing out nor the provision for excluding vacant land from the purview of taxation was applicable at the time of leasing out. The fact that there were some other building for which no lease has been granted by the appellant to M/s Avnash Automobiles is obvious as the agreement is only for vacant land and there is no mention of any other agreement whereby the closed building, etc., was also given on lease. Therefore, merely because a land is appurtenant to any building, it will not get covered within the scope of service if building/shed has not been rented out. It is the other way round that where a building has been rented out, which also has land appurtenant thereto, then t....
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....eceipts, therefore, this demand is not sustainable. We find that the Adjudicating Authority has clearly held that the appellants have let out only the vacant land appurtenant to the building and not the building and therefore, liable for exclusion from the definition of 'immovable property' under section 65(105)(zzzz) of the Finance Act, 1994. Merely because he was unable to exclude the income arising out of this property, no relief was given, which is not correct. The appellants are at liberty to show them the breakup of rents received from M/s ATR Cars and the Service Tax liability which has been included in the total liability needs to be excluded for the purpose of calculating the demand. Therefore, this also needs to be remanded back. (B) Non-payment of Service Tax during the period May, 2009 to Feb, 2010 : - 15. It is an admitted fact that appellant has stopped making payment in respect of provision of RIPS during May, 2009 to February, 2010. There is no doubt about the classification or the valuation and the only dispute is as regards amount payable and paid. As per the appellant, the entire Service Tax liability was discharged except for the interest liability on the del....
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....ck yard for strategic storage of crude oil project at Visakhapatnam in terms of the work order issue by M/s Hindustan Construction Company Ltd. In order to carry out this work, the appellants were required to use 30MT dumpers for construction of three numbers of underground rock caverns for strategic storage of crude oil project. As per the definition of SFCS under section 65(105)(zzza), the services of muck cleaning and disposal is rightly classifiable under the category of SFCS. The appellants have not refuted the amount of Service Tax demanded by the department, which they have paid under Works Contract Service (WCS) and also certain portion under SFCS. Therefore, as far as the classification is concerned, there is no dispute that it is in the nature of SFCS. However, there is dispute as regards some of the amounts already paid under the category of WCS as well as under the category of SFCS. These amounts need to be adjusted against the total amount demanded from the appellant under this category. Therefore, this issue is also required to be remanded back to the Original Adjudicating Authority for recalculation. 18. Though the appellants have tried to argue that their activitie....
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....ertain amount has already been paid against the said demand. It further appears that the Adjudicating Authority has not considered the abatement claimed by the appellant for calculating the total Service Tax liability while paying certain Tax liability under this category. The appellants could not put forth any evidence to claim having fulfilled the conditions for availing the benefit under Notification No.01/2006-ST dt.01.03.2006 and therefore, the same was denied by the Adjudicating Authority. Here, it is again felt that proper opportunities were not given to the appellant to adduce evidence in support of their claim for abatement in terms of Notification No.01/2006-ST. Therefore, this issue is also remanded back to the Original Adjudicating Authority for recalculation of Service Tax liability. 20. Learned Advocate has highlighted the fact that this is in terms of contract with M/s Schlumberger Asia Services Ltd for construction of warehouses and the contract was entered into on 09.07.2005 and the work was completed within two years time. This contract value was inclusive of both materials and services and therefore, in terms of judgment of Hon'ble Supreme Court in the case of L....