TaxTMI 
TaxTMI 
2025 (6) TMI 519
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....wards service tax payable including cesses, under Section 73(1) of the Finance Act, 1994 (ACT) read with Section 73 (2) of the Act read with Section 174 of the CGST Act, 2017 (CGST Act) for the period from 01.01.2013 to 31.03.2014, along with interest at appropriate rates. In respect of the first notice, the adjudicating authority imposed a penalty of Rs.11,98,32,990 on the appellant under first proviso to Section 78(1) of the Act read with Section 174 of the CGST Act and in respect of the second notice, a penalty of Rs.13,39,30,415/- under Section 76 of the Act read with section 174 of the CGST Act was imposed. Further, a penalty of Rs.40,000 under section 77(2) of the Act read with Section 174 of the CGST Act for each violation in respect of both the notices was also imposed. 2. The facts relevant to the analysis of the issue at hand are that the appellant holds Service Tax Registration for provision of 'Renting of Immovable Property' and has, in terms of Section 70 of the Act, self-assessed the service tax liabilities in respect of the appellant's property, namely, SIV tower at Avinashi Road, Coimbatore and filed periodical STC returns. 3. Based on intelligence that one M. Pal....
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....rds quarrying and carrying away the minerals for the period from January 2010 to March 2012. v. He furnished the details of payment made to the appellant from February 2010 to March 2012. 5. Subsequently, vide his letter dated 10-10-2013, Shri M. Palanisamy (lessee) furnished the "Lease Rent payable' and 'Lease Rent paid' for the period from April 2012 to September 2013. The lessee also provided copy of Joint Agreement dated 27-07-2010 between the appellant (Lessor), Lessee and the District Collector, Coimbatore "for quarrying and carrying away minor minerals by lessees in Ryotwari Lands in which the minerals belong to Government". The preamble of the agreement too acknowledges the fact of the appellant (lessor) leasing out the said land to the lessee for the purpose of quarrying Rough Stone. 6. A statement was recorded from Shri M. Palanisamy on 10-12-2013, wherein he inter-alia reiterated the leasing of 22.68 acres of land and 14.86 acres of land in Palathurai Village belonging to the appellant from 29-01-2010 and 17-05-2010, for which rent of Rs.22,680/- and Rs.14,860/- per annum, respectively, is paid. It was further stated that these lease agreements were registered before....
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.... Schemes. ii. The main source of income of the appellant is through rent from buildings owned by them and also rent received from vacant lands leased. iii. The appellant is registered with service tax department under 'Renting of immovable property service' and are paying tax on rent received from buildings and are filing ST-3 returns regularly for the above. iv. The appellant was not aware of service tax liability on leasing of the vacant land at Palathurai Village w.e.f 01-07-2012 as they were of the opinion that the same is exempted from service tax. 9. Subsequently the appellant vide letter 18.11.2013 addressed to the Commissioner of Central Excise and Service Tax, Coimbatore stated that there are in the process of consultation with legal experts and would revert soon. Later, by their letter dated 07.12.2013 the appellant informed that they are opting to pay tax under Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) for the period up to December 2012. According, the appellant filed a declaration in Form VCES-I declaring Service Tax liability of Rs. 26,30,69,990/- for the period from 01.07.2012 to 31.12.2012 and paid 50% of the said amount on 30.12.2013.....
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....OI,2006 (2) S.T.R. 161 (S.C.) c) Imagic Creative Pvt. Ltd v. CCE, (2008 (9) S.T.R. 337 (S.C.) iv) That the instant transaction was a revenue sharing agreement and the Hon'ble Supreme Court has stated that Revenue sharing agreement are not exigible to Service Tax. Reliance was placed on the decisions in: a) New Horizons Ltd. Vs Union of India, (1995) 1 SSC 478 b) Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd., 2008 (12) STR 401 (SC). c) Commissioner vs Mormugao Port Trust - 2018 (19) GSTL J118 (SC) d) ACL Mobile Ltd. Vs CCE, Delhi 2019 (20) GSTL 362 (Tri.-Del.) e) The Executive Engineer, Urban Division, Tamil Nadu Water Supply and Drainage Board, Madurai vs CCE, ST Madurai 2018 (5) TMOI 1467-CESTAT, Chennai f) Cricket Club of India Ltd vs CST, Mumbai 2015 (40) STR 973 (Tri.-Mum.) v) That the tax liability cannot be imposed solely based on nomenclature and accounting treatment. That the Revenue sharing agreements termed the profits realized from extraction and sale of the quarried resources as 'additional lease amounts.' These profits were accounted for in the Noticee's books of accounts as 'additional lease amounts.' The demand in the instant case is based entirely....
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....n agree on foreign activity. Reliance is placed on the decision in Akzo Nobel India Ltd vs CCE, Kanpur 2018 (11) GSTL 420 (Tri.-All.) x) Extended period of limitation is not invokable and penalties are not imposable. Reliance was placed on the decisions in: a) Commissioner of Central Tax vs. Zee Media Corporation. 2018 (18) G.S.T.L. 32 (All) b) Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut. rr2005 (188) E.LT. 149 (SC) c) Continental Foundation It. Venture v. CCE. Chandigarh-L 2007 (216) ELT.177 (S.C.) d) CCE, Mumbai IV v. Damnet Chemicals Pvt. Ltd., 2007 (216) ELT 3 (S.C.) e) Padmini Products Limited v CCE, 1989 (43) ELT 195 (SC) f) Pushpam Pharmaceuticals Company v. CCE, 1995 (78) ELT 401 (SC). g) Hindustan Steel Ltd. v. State of Orissa, 1978 (2) ELT (J159) (SC), h) Bajaj Travels Ltd. vs Commissionr of Service Tax, 2012 (25)( STR 417 (Del) i) CCE vs. Madras Aluminium Co. Ltd. 2017 (349) E.LT. 133 (Mad) j) Secretary, Town Hall Committee v. CCE 2007 (8) STR. 170 (Tri. - Bang) k) CCE vs Sikar Ex-serviceman Welfare Coop. Society Ltd. 2006 (4) ST.R. 213 (Tri -Del) l) Haldia Petrochemicals Lad. v. CCE 2006 (197) ELT. 97 (Tri-Del) m) Siyar....
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....n a principal-to-principal basis will not be liable to tax. Reliance is also placed on the decisions in: a) New Horizons Ltd vs Union of India, (1995) 1 SCC 478 (Annexure D) b) Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd., 2008 (12) STR 401 (SC) (Annexure E) c) Commissioner vs. Mormugao Port Trust-2018 (19) GSTL J118 (S.C) (Annexure F) d) ACL Mobile Ltd. vs. CCE, Delhi 2019 (20) GSTL 362 (Tri Del.) (Annexure G) e) B.G. Exploration & Production India Ltd. vs COMMISSIONER OF CGST & CX, NAVI MUMBAI, 2022 (64) G.S.T.L. 578 (Tri. Mumbai) (Annexure I) f) B.G. Exploration & Production India Ltd. vs COMMISSIONER OF CGST & CX, NAVI MUMBAI, 2022 (63) G.S.T.L. 351 (Tri. Mumbai) (Annexure J) g) Commissioner of Service Tax vs Inox Leisure Ltd, 2022 (61) GSTL 342 (SC) (Annexure K) h) Inox Leisure Ltd. vs Commissioner of Service Tax, Hyderabad, 2022 (60) GSTL 326 (Tri.-Hyd.) (Annexure L) i) Sir Ganga Ram Hospital vs Commissioner of Service Tax, New Delhi, 2020 (43) GSTL 390 (Tri.- Del.) (Annexure M) j) Niraj Prasad vs Commissioner of C. Ex. & S.T., Kanpur 2020 (38) GSTL 78 (Tri.-All.) (Annexure N) k) Commr. of S.T., Delhi-III vs Bharuch Dahej Railway Company Ltd, 2020 (34)....
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....ed as consideration, unless the money flow implied a reciprocal promise to be done on part of the recipient of the money at the behest of the person making the payment. Reliance is also place on Cricket Club of India Ltd. vs CST, Mumbai 2015 (40) STR 973 (Tri.-Mum), (Annexure c) to contend that existence of consideration cannot be presumed in every money flow. D. Liability cannot be imposed only based on nomenclature and accounting treatment. That the revenue-sharing agreements termed the profits realized from extraction and sale of the quarried resources as 'additional lease amounts'. These profits were accounted for in the Appellant's books of accounts as 'additional lease amounts'. The demand in the instant case is based entirely on the accounting treatment meted out to the profits, and the nomenclature of the profits in the revenue sharing agreement. The nomenclature mentioned in the agreements, or in its accounting records would not change the substance of transaction itself. It is a settled principle of law that the substance if the transaction must be seen in order to tax the same. In the instant case, the transaction is in substance one for sharing of revenues earned form....
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....These rights that are otherwise vested exclusively with the appellant, have been conferred on the lessee. The lease rent collected is towards grant of possession of land, and the consideration computed as a sum equal to 75% of the receipts earned by sale of minerals, is in furtherance of revenue-sharing agreement between the lessor and lessee. The lessor and lessee in the instant case, have agreed to undertake the activity of mining the land for minerals. In order to commence mining activity on the land, capital expenditure to be made on plant and machinery necessary for the activity has to be considered by the lessee. On the other hand, the fact that subjecting the land to mining activity may render the land unfit for any other usage in the future, has to be considered by the lessor. From the above considerations, it has to be seen that the risks associated in such an activity have been duly factored and jointly undertaken by the parties, and that the profits have been thereby shared in a fixed ratio depending upon the quantum of risks borne by the parties. That therefore, this act of jointly tolerating the risks involved in the said activity constitutes a shared obligation, and t....
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....e rates and would file the ST-3 Returns diligently. Thus, merely because of availment of exemption under a different law will not ipso facto determine the nature of service under the Finance Act, and in case any deficiency is noticed under income tax it is responsibility of the central excise authorities to bring it the notice of the income tax authorities for remedial action but in this case the deficiency happened under IT Act is being misused to levy the service tax which is not correct. I. The impugned transaction is in the nature of sale, liable to VAT and therefore consideration received from the lessee representing revenue from the sale of minerals cannot be subjected to service Tax. Section 65B(44) of the Act defines services that are exigible to service tax under Section 66B of the Act and the definition of service expressly excludes a transaction which constitutes nearly a transfer of title in goods for a consideration. The entire 100% of receipts from mining of quarried resources has already been subjected to applicable VAT at the hands of the lessee. The levy of VAT and Service Tax are mutually exclusive and reliance is placed on the decisions in Gujarat Ambuja Cement....
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.... Foundation It. Venture v. CCE. Chandigarh-L 2007 (216) ELT.177 (S.C.), CCE, Mumbai IV v. Damnet Chemicals Pvt. Ltd., 2007 (216) ELT 3 (S.C.) and Padmini Products Limited v CCE, 1989 (43) ELT 195 (SC) in this regard. M. That penalty is not imposable for the reasons that the Appellant was under a bona fide belief that no service tax was liable to be paid and since the appellant had reasonable cause to believe that no service tax was liable to be paid, the benefit of Section 80 must be extended to the instant case. The issue involves interpretation of law and for that reason also extended period cannot be invoked. Reliance is placed on the decisions in: a) Pushpam Pharmaceuticals Company v. CCE, 1995 (78) ELT 401 (SC). b) Hindustan Steel Ltd. v. State of Orissa, 1978 (2) ELT (J159) (SC), c) Motor World case- Karnataka high Court d) Bajaj Travels Ltd. vs Commissionr of Service Tax, 2012 (25)( STR 417 (Del) e) Chetak Traveling Agency v CCE, Jaipur, 2017-TIOL-2481-CESTAT-DEL f) Star Neon Singh v CCE, 2002 (141) ELT 770 (Tri-Del) g) Flyingman Air Courier Private limited v CCE, 2004 (170 )ELT 417 (Tri-Del) h) ETA Engineering Ltd v CCE, 2004 (174) ELT 19 (Tri-LB) i) Med....
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....ase deed' and same were registered before Sub registrar. As per said documents, the appellant has leased several acres to lessee, Shri M Palanisamy and the annual lease rent of Rs.1000/- per acre was to be paid by lessee in advance at the beginning of the year. The appellant/trust and lessee had also executed notarized agreements dated 29.01.2010 and 17.05.2010 vide which Shri M Palanisamy has agreed to pay "Additional Lease Rent' to the tune of 75% of the receipts earned by sale of minerals mined on said parcel of land. C. The Joint Agreement with Collector for quarrying and carrying away minor minerals by Lessee in Ryotwari lands in which minerals belong to the Government acknowledged appellant/trust as registered holder of land. Collector has granted a quarrying lease to the LESSEE Shri M. Palanisamy and also allowed him to commence quarrying operations for Rough Stone in said land parcels. D. Schedule 19 of PL account of Lessee at Pg 58 clearly captures the said amount as lease rent payable by Lessee. Further the Ledger account of Lessee at Pg 60 captures the said amount paid by Lessee to appellant as lease rent. The Income and Expenditure statement of Trust also captures s....
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....on 66E(a) of the Act. F. That the contention of the appellant that it is a sale transaction liable to VAT and not Service Tax has already been addressed by the Adjudicating Authority at para 21.7 of pg. 74. There are two set of activities, namely, firstly, leasing of land by Appellant to lessee and secondly, mining and sale by Lessee. The Notice doesn't seek to demand service tax on mining and sale activities done by lessee. The predominant test and intention of agreement pertaining to first transaction is clear and same is nothing but a service of leasing out of land by Trust to lessee for consideration. Transaction of lease of land for consideration alone is subject matter of present proceedings. VAT payment argument on sale of minerals by lessee is immaterial for present demand. It is even not the case of Trust that they have sold land to Shri M Palanisamy and has paid VAT and revenue still seeks to demand ST on sale of land. The fact remains that the transaction in question is one of services provided by leasing of land to Shri M Palanisamy for consideration. Transaction of quarrying and sale Blue Metal /sand by Lessee is beyond the scope of Notice. In view of above undispute....
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....hat both the Parties have not considered said agreement as JV is also clear from the documents which shows that Shri M.Palanisamy has duly accounted such sums as rent. Further, neither the appellant nor the lessee has declared such agreement as JV for Mining and selling of minerals. There is no mention of shared responsibilities and risks, no mention of profit sharing in mining activities and no mention of risk or loss sharing in respect of quarrying, mining and selling of minerals and the fact remains that the appellant is a Trust registered for certain activities and not for Mining and Selling of minerals in land owned by the appellant. I. There is no agreement to set up a Business Enterprise for profit and it appears that the appellant under various laws of the land cannot venture into such Mining activities and show business income accrued from mining and selling of minerals owned by Govt, before various statutory authorities. The fact remains that the appellant is a Trust registered for certain activities and not for Mining and Selling of minerals in land which owned by them. J. It is a fact that the appellant is registered under various Central and State Acts, including t....
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.... of Shri M Palanisamy, the lessee; details of Income and Expenditure Statement of Trust showing receipts as RENT; details of Ledger Extract of Trust showing receipt of Lease Rent to the Trust; details of Balance Sheet and Income and Expenditure Account of the Trust showing lease rent received from Shri M Palanisamy; TDS Certificates issued by ACIT authorizing Shri M.Palanisamy to pay RENT to TRUST without deduction of TDS etc. These were facts which were known to the Trust but were not known to Department. Therefore, the plea that when the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression is not legally sustainable, given the facts of the case. M. That even though the appellant is a registered ST assessee for provision of renting of immovable property services and had been paying tax for renting of one of the Commercial premises, namely, SIV Towers and filing ST3 returns, the appellant has not declared to the Department at any stage about activities related to leasing of land for other commercial activities like mining and selling of minerals and receipt of additional lease rent from the Lessee. The fact of cr....
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....ocuments maintained by them ; there is no scope to conclude that they have not declared such receipts as RENT in ST3 return without the knowledge that the sums were indeed RENT only. Therefore, this is a fit case to invoke extended period. 14. We have heard the rival submissions at length. We have also carefully perused the appeal records and the case laws filed as relied upon. 15. The issues that arise for determination are whether the appellant has provided the taxable service of "renting of immovable property service" in respect of the lands that the appellant has leased out to Shri. M. Palanisamy (lessee) and consequently, whether the demand of service tax made on the appellant along with applicable interest and penalties as imposed, are tenable. 16. The statutory provisions of the Finance Act 1994 for the relevant period, germane to the examination of the issues herein, are reproduced below: A) Section 66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve percent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to an....
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....s under: "Charitable activities" means activities relating to - (i) public health by way of - (a) care or counselling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or (b) public awareness of preventive health, family planning or prevention of HIV infection; (ii) advancement of religion or spirituality; (iii) advancement of educational programmes or skill development relating to,- (a) abandoned, orphaned or homeless children; (b) physically or mentally abused and traumatized persons; (c) prisoners; or (d) persons over the age of 65 years residing in a rural area; (iv) preservation of environment including watershed, forests and wildlife; or (v) advancement of any other object of general public utility up to a value of,- (a) eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12; (b) twenty five lakh rupees in any other financial year subject to the condit....
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.... M. Palanisamy wishes to extend the duration and validity of the lease, it can be informed to the appellant and with the decision from the board of the appellant, it can be extended. The agreement also requires Mr. M. Palanisamy to keep the property without causing any problem and if something goes wrong, Mr. Palanisamy promises to get it cleared at his own risk and cost. C. Document titled "lease deed" executed on 19.07.2010 This document titled " Lease Deed" registered before the sub registrar, Madukkarai, Coimbatore, indicates, inter-alia, that the appellant has leased 14.86acres of uncultivable land to Mr. M. Palanisamy on yearly lease of Rs.1000/- per acre amounting to Rs.14,860/- for the entire 14.86 acres. The terms and conditions, inter-alia, are that the lease agreement is valid from 17.05.2010 for 5 (five) years. During these 5(five) years, for every one year the lease amount will be Rs. 14,860/- which should be given by Mr. M. Palanisamy to the appellant by the beginning of every year. The appellant wholeheartedly agrees to Mr. M. Palanisamy taking charge over the land in maintaining the land and doing agriculture or any other work in the land and after the valid per....
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....he said lands and to deposit mining waste in the said lands. With this intent the appellants have lodged with the Collector the lease and accurate map or sketch of the said lands. It further states that the lessee or tenant has made application to the collector of Coimbatore District seeking grant of quarrying lease for quarrying Rough Stone in the said lands and that the said Collector on behalf of the Government has granted a quarrying lease to the lessee or tenant of the registered holder for the purpose applied for. Such permission was contingent on the registered holder and the lessee entering into the agreement contained therein. It is the lessee who has deposited Rs.5000/- as security for the due performance of the agreement or damage which may be incurred. The conditions specified in this agreement stipulate that the Lessee is to maintain the leased land by marking the boundaries with coloured stone markings during the entire lease period. The lessee on his own charge shall create roads to and from the quarry. For the permitted stones cleared from the quarry seigniorage fee is to be paid as specified in Annexure-2 of Tamil Nadu Minor Mineral Rules, 1959 and the lessee shall....
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....here is yet another identical TDS Certificate No.0313DW657E dated 07-MAY-13 addressed to the Lessee to pay or credit Rent upto the same amount as aforementioned to the account of the appellant from 10-APR-13 to 31-MAR-14, issued by Deputy Commissioner of Income Tax, TDS Circle -II (i/c), Chennai. Both these TDS certificates evidence authorization by the concerned Income Tax Officer authorizing the lessee to pay rent to the appellant without deduction of TDS upto Rs. One hundred and fifty crores. 19. When we examine the activity of the appellant on the basis of the above cited statutory provisions, and documentary evidence, what emanates clearly is that the appellant has leased 22.68 acres of vacant land owned by it to Shri. M. Palanisamy, the lessee by way of a registered lease deed dated 11th February 2010 with the lease agreement being valid from 29.01.2010 for a period of five years and a yearly lease amount of Rs.22,680/- to be paid at the beginning of every year. On 29.01.2010 itself, the appellant enters into a separate notarized agreement in respect of the same 22.68 acres of vacant land owned by it, evidencing the agreement that as there are some sources and assets in the ....
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....ent of the receipts, cannot and does not divest the said additional lease amount of its character of rent, when the said additional lease amount is paid by Mr. Palanisamy to the appellant. 20. Further, we note that the agreement executed by the appellant along with the lessee Mr. Palanisamy and the District Collector, Coimbatore is at the behest of the mandate of the Government and the title reflects the purpose of the agreement entered into, namely, as that for quarrying and carrying away minor minerals by Lessees, which in this case is Mr. M. Palanisamy, and which minerals in such ryotwari lands belong to the Government. This agreement too bears out the fact situation that the appellants are the registered holders of the land which the appellants have leased out to the lessee Mr. Palanisamy and it is to Mr. Palanisamy, pursuant to his application to the collector of Coimbatore District seeking grant of quarrying lease for quarrying Rough Stone in the said lands, that the said Collector on behalf of the Government has granted a quarrying lease to the lessee for the purpose applied for. 21. It is a settled principle of contract interpretation that where the transaction is not the....
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....t from the agreements is for sharing of revenue earned from mining of metals and the transaction alleged as 'Renting of Immovable Property' is a joint venture (JV), undertaken for mutual profit. It is further argued that and it is settled that co-venturers in a joint venture are not be liable to Service Tax on a joint venture in light of the Doctrine of mutuality. In revenue-sharing arrangements, the two contracting parties act on principal to principal basis and one does not provide service to another. Reliance is placed on Department Circular No.109/3/2009-ST dated 23.02.2009 at Annexure H for the contention that revenue sharing agreements where contracting parties act on a principal to principal basis will not be liable to tax. 24. Given our analysis of the agreements stated supra, we find that the said contention is contrary to what comes out from the said agreements. The agreements nowhere reflects that it is intended as a revenue sharing agreement. We also note that the adjudicating authority has dealt with this contention in paragraphs 21.8.1 to 21.8.8 in extenso, but we are not reproducing the same herein to avoid prolixity. The learned adjudicating authority has referred ....
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....nce Hospitality P. Ltd. vs Commr. of C. Ex., Delhi-IV, 2019 (21) GSTL 400 (Tri.-Del.) (Annexure R) o) Sir Ganga Ram Hospital vs Commr. of Central Excise, Delhi-I, 2018 (11) GSTL 427 (Tri.-Del.) (Annexure S) p) PVS Multiplex India Pvt. Ltd. vs Commr. of C. Ex., Meerut-I,2018 (10) GSTL 496 (Tri.-All.) (Annexure T) q) Times Internet Ltd. vs Commr. of C. Ex (Adj.), New Delhi, 2017 (4) GSTL 33 (Tri.-Del.) (Annexure U) r) Mormugao Port Trust vs Commr. of Cus., C. Ex. & S.T., GOA, 2017 (48) STR 69 (Tri.-Mumbai) (Annexure V) s) Centre for development of Advance Computing vs C.C.E. Pune, 2016 (41) STR 208 (Tri.-Mumbai) (Annexure W) t) AB Motions Pvt. Ltd. vs Commr. of C.E. & ST., Ludhiana, 2019 (4) TMI 2043-Cestat Chandigarh (Annexure X) u) Commr. of C.E & ST, GOA vs Goa Golf Club Pvt. Ltd, 2023 (5) TMI 1026-Cestat Mumbai (Annexure Y) v) Meghraj Cinema vs Commr. of ST, Mumbai-VII, 2024 (8) TMI 1053-Cestat Mumbai (Annexure Z) w) Commr. Of CE & ST Ludhiana vs AB Motions Pvt. Ltd, 2024 (5) TMI 1061-SC Order (Annexure ZZ) x) Hardy Exploration and Production (India) Inc. vs Commr. of GST & CE, Chennai, 2024 (1) TMI 456-Cestat Chennai(Annexure ZZZ) y) Spencer International H....
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....te into factors that evidence joint control and responsibility when there is nothing stated on record or borne out from any agreement shown as entered into by the parties reflecting that such considerations have been adequately expressed, considered and agreed upon and shown as determinative of any profit sharing that has been arrived at consequent to such an understanding. On the contrary, all that the agreements reflect is that the appellants have leased the land to the lessee for a yearly lease amount and an additional lease amount. We are of the firm view that quantification of the lease amount in terms of the receipts of the lessee, and as seventy five percent of the receipts, cannot and does not divest the said additional lease amount of its intrinsic character of rent, when the said additional lease amount is paid by the lessee to the appellant in terms of an agreement which characterizes the transaction between the parties not only as lease of land detailed therein but also stipulates further that if Mr. M. Palanisamy (the lessee) wishes to extend the duration and validity of the lease, it can be informed to the appellant and with the decision from the board of the appellan....
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.... the appellant and the lessee have understood the said agreements being entered into as contracts for mining and sale of minerals on a principal-to-principal basis. The agreements do not state that they are a contract for joint business enterprise of mining and selling of minerals. The appellant Trust has averred before the Collector, Coimbatore that it is only the registered Holder of land and it is Shri. M. Palanisamy as the Lessee who has sought permission for quarrying rough stones. The agreement nowhere reflects that the appellant has a say in the management of mining operations by the lessee or in the administrative decision making related to day-to-day mining operations by the lessee when it carries out the mining activities. Therefore, the case laws relied upon by the appellant are inapplicable in the facts and circumstances of this case aforementioned as the facts therein are distinguishable. 29. The appellant has also contended that it is a sale transaction liable to VAT and not Service Tax. It is pertinent to note that there are two activities that occur in sequence. First is the leasing of the vacant lands by the appellant to the lessee. It is only consequent to such l....
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....ed will not arise. We find that the present demand is on the activity of the appellant which is only the leasing of vacant lands to the lessee. The permission granted by the Collector, Coimbatore is on an application for quarrying by the lessee and it is the lessee who is carrying out the quarrying of rough stones. The show cause notices neither has a proposal to impose any service tax on the mining operations nor does the impugned OIO propose the same. Thus, such contentions raised are not only wholly irrelevant but also do not come out from any of the documents in the appeal records. We dismiss the same as being utterly baseless. For the said reasons, the case law cited by the appellant being distinguishable in the facts and circumstances stated therein has no application in this case. 32. Having addressed the elaborate, albeit divergent contentions of the appellant on merit's which we have found to be devoid of merits and unacceptable, when we analyze the aforesaid transaction between the appellant and the lessee, in terms of the statutory provisions of the Finance Act, 1994 reproduced above, it can be seen that as per Section 65B(44), "Service" means any activity carried out b....
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....ication No.25/2012-ST dated 20-06-2012, the exemption from service tax provided at Sl.No.4 thereof to those services by an entity registered under Section 12AA of the Income Tax Act, 1961 by way of charitable activities, are not available to the appellant. However, since Rule 5 of the Place of provision of services Rules, 2012, stipulates that the place of provision of services relating to immovable property, for grant of right to use immovable property, shall be the place where the immovable property is located, and such immovable property evidently being in the taxable territory of India, the said "renting of immovable property" carried out by the appellant, being a service, other than those services specified in the negative list, provided in the taxable territory by one person to another, that is by the appellant to Mr. M. Palanisamy, squarely attracts the charge of service tax under Section 66B of the Finance Act, 1994 and is leviable to service tax at the specified rate. We find that the adjudicating authority has confirmed the demand giving extensive and well-reasoned findings on all aspects and contentions raised by the appellant. We therefore hold that the demand of servic....
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....perty and filing ST3 return and discharging tax on renting of immovable property services for another property, namely, SIV Tower, which is a commercial property, it does not lie in the teeth of the appellant to now say that it did not know the provision of law or that it was unaware of its liability. We find that the deliberate act of withholding the fact of receipt of additional lease amount is the positive act of suppression that the appellant has indulged in and such act coupled with the appellant's failure to declare the receipt of additional lease amount and pay the service tax due thereon while declaring only the remaining rent amount collected for the relevant period of the return and paying tax only to that limited extent, is clearly tantamount to willful suppression and misstatement of facts with intent to evade payment of duty, especially when such additional lease amount that the appellant has received runs into crores of rupees. We therefore hold that the extended period of limitation has been rightly invoked in respect of the first show cause notice. We notice that the adjudicating authority has also given elaborate reasoning in paragraphs 22.1 to 22.5 in respect of t....
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.... characterized these receipts of additional lease amounts as rent in its books of accounts and balance sheet. Yet, when the appellant who is registered under renting of immovable property services has not offered these additional lease amounts to tax while filing returns before Service Tax authorities under Heading Renting of Immovable Property Services cannot claim that it did not do so on a Bonafide belief. In fact, there is no rationale, rhyme or reason for the appellant not to declare such additional lease amounts as rent in the ST-3 returns and pay tax thereon. Thus, neither was there any scope to consider the matter as an issue involving interpretation nor was there any scope to claim that there was a reasonable cause for not discharging the service tax dues on such additional lease amounts received by the appellant for such renting of vacant lands. We therefore do not find this a fit case to invoke section 80 and extend the benefits thereof. The case laws cited by the appellant in this regard, given our findings supra, are distinguishable from the facts and circumstances of this case. 37. We also find that the adjudicating authority has given valid reasons in paragraph 28.1....
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...., as we are being now invited to do when the appellant is called upon to discharge its liability to pay service tax on the very same transaction. We do not accept this proposition as it is a settled principle in law that a party cannot approbate and reprobate on the same transaction. Approbate and reprobate are phrases borrowed from Scott's law. It would mean that no party is allowed to blow hot and cold in that they cannot be allowed to accept and reject the same thing. The Honourable Apex Court has in R.N. Gosain v. Yashpal Dhir, (1992) 4 SCC 683 (SCC pp. 687-88, para 10) held as under: "10. Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that 'a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage'." In the instant case, the appellant has considered the agreements as lease agreements to lease out the vacant lands and to secure the yearly lease....