AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1542
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....ion with the department under the categories "Construction services other than residential complex, including commercial/industrial buildings or civil structures", "Construction of residential complex service", "Renting of Immovable Property Services", "Legal Consultancy Service" and several other taxable services but the tax was not paid by the appellants. The department investigated the matter and observed that the appellants are engaged in collecting huge amounts on account of leasing of land to be used by their lessees for construction of commercial complexes and for furtherance of business. Rs. 2.5 crores per annum were found to be received from M/s. Gupta Infrastructure (India) Pvt. Ltd. (hereinafter referred as M/s. GIPL) on account of lease of land for construction of City Centre Mall (hereinafter referred as CCM), a commercial complex at Pandri, Raipur. Despite renting/leasing being a taxable service, the appellant was not paying service tax. 1.2 It was further observed from the various documents received from the appellant that vide a Project Agreement dated 11.11.2005 executed between the appellant and M/s. GIPL, ground rent of Rs.2,66,53,315/- was received by the app....
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.... is absolutely wrong and beyond the statutory provisions. The said proposal has been made in respect of transfer of development rights for construction of City City Centre Mall to the developer, M/s. GIPL. It is submitted that the appellant has entered into an agreement with M/s. GIPL dated 11.11.2005 agreeing to lease out the land owned by the appellant to M/s. GIPL giving M/s. GIPL the right to develop the project/mall on the lease land along with the transfer of right to use the constructed mall to the extent of selling the individual units constructed. The lease was for the period of 30 years agreed to be extendable till the period of 90 years. Such a transaction amounts to the transfer of immovable property, the deemed sale as different from Renting of Immovable Property Services. Resultantly, the lease premium received by the appellant against a transaction of deem sale as different from the consideration received for rendering taxable services. 3.1 Learned Chartered Accountant has laid reliance upon Section 3(26) of General Clause Act, 1897 to impress upon that the rights in the immovable property are the development rights which are benefits arising out of land and thus ....
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....CE & ST, Noida reported as 2015 (38) STR 1062 (Tri.-Del.) has denied transfer fee to be subject matter of service tax. While submitting about the alleged tax liability with respect to activity of construction of residential complex service (till 30.06.2012) which w.e.f. 01.07.2012 was declared service under Section 66E(b) of Finance Act, 1994, learned Chartered Accountant has submitted that the services were actually in the nature of Works Contract Service. No service tax can be imposed on such services prior for the period w.e.f. 01.07.2012. Even the abatement of 75% has wrongly denied despite that the cost of land was included in the amount received by the appellant. Denial of abatement for the period 2012-13 is also wrongly denied as the appellant has already reverse the Cenvat credit as is apparent for ST-3 returns for the said period. 3.4 While submitting upon the alleged service tax liability alleging the activity of the appellant as Management, Maintenance or Repair Service till 30.06.2012 and service w.e.f. 01.07.2012, learned Chartered Accountant for the appellant has mentioned that the activity of supply of water, from any stretch of imagination, cannot be defined unde....
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....er of lease hold rights and development rights cannot be called as sale of land. Non-payment of service tax on the value of constructed area in CCM has been justified on the ground that the possession of area was not handed over, however the handed over property is not the point of taxation for the purpose of payment of service. There is not infirmity in the order when the demand on this count has been confirmed. 4.1 With respect to the lease premium, it is submitted that due to the contradiction in two decisions of the Tribunal reference was made to the Larger Bench decision in Appeal No. ST/50553/2017 filed by RIICO Ltd., Interim Order No. 1/2025 dated 27.01.2025 has answered the reference by concluding that value of premium/salami is exigible to service tax under "Renting of Immovable Property" for the period 01.07.2012 under Section 65(105)(zzzzz) of the Finance Act and under Section 66B of the Act w.e.f. 01.07.2012. 4.2 With respect to the amount received from leasing out of vacant land, findings in Para 26.31 of the impugned order are being reiterated. It is submitted that the service tax on renting of vacant land from 01.04.2009 is recoverable. 4.3 With respect to t....
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....STL 129 (Guj.) wherein it is held that Notified Area Authority, Vapi constituted under GIDC Act is neither a local authority nor a government authority carrying out any activity in relation to any function entrusted to a panchayat or a municipality under Article 243 G or Article 243W of the Constitution respectively. In the said decision Supreme Court's decion in the cases of New Okhla Industrial Development Authority Vs. Chief Commissioner of Income-Tax (2018) 95 Taxman. Com 58 and Saij Gram Panchayat Vs. State of Gujarat - (1992) 2 SCC 366 are relied upon wherein Noida Industrial Development Authority and GIDC are not considered as municipality or Panchayat as envisaged under above two Articles. With these submissions and impressing upon no infirmity in the order under challenge, the appeal is prayed to be dismissed. 5. Having heard both the sides, the rival contentions and perusing the entire records, we observe that the appellant, Raipur Development Authority, is denied to be government authority and the demand has been raised on following issues: (i) Demand confirmed under renting of immovable property services for the period upto 30.06.2012 and under Section 66E read wi....
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.... AND SERVICE TAX, PATNA VS. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS...APPELLANT ...RESPONDENTS WITH CIVIL APPEAL NO. 3992/2023 15. Having read the two definitions, first and foremost, it is necessary to ascertain the objective behind the Clarification Notification which amended the Exemption Notification and redefined "governmental authority". A bare perusal of the Exemption Notification reveals that the exemption therein was only extended to those entities, viz. board or authority or body, which fulfilled the three requisite conditions, i.e. : a) having been established with 90% or more participation by way of equity or control by Government, b) set up by an Act of the Parliament or a State Legislature, and c) carrying out any function entrusted to a municipality under Article 243W of the Constitution. It is evident that the scope of the exemption was severely restricted to only a few entities. Although the reason for re-defining "governmental authority" has not been made available by the appellants, we presume that unworkability of the scheme for grant of exemption because of the restricted definition of "governmental authority" was the trigger therefor and he....
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.... of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service." 10. It becomes clear that any activity performed by a government authority which is not in the nature of statutory activity, if the activity is taxable, then even a government authority shall be liable to pay tax. Hon'ble Supreme Court in a recent decision in the case of Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar Vs. Commissioner of Central Excise and Service Tax, Alwar reported as (2022) 5 SCC 62 has held as follows: "1. As per the exemption circular, only such activities performed by the sovereign / public authorities under the provisions of law being mandatory and statutory functions and the fee collected for performing such activities is in the nature of a compulsory levy as per the provisions of the relevant statute and it is deposited into the Government Treasury, no service tax is leviable on such activities. In paragraph 3, it is also specifically clarified that if such authority performs a service, which is not in the nature ....
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....eady held that personal commercial motive even of government authority vis-à-vis service is also taxable. Hence, we need to look into whether the act of transferring the land on lease to the appellant for a period of 30 years extendable to 90 years against the one time premium giving all rights of use, possession and even sale to the developer amounts to fall under the definition of service for the period w.e.f. 01.07.2012 or under the definition of renting of immovable property till the period 30.06.2012. Finance Act, 2012 w.e.f. 01.07.2012 has defined the term 'service' under Section 65B (44) of Finance Act, 1994. The relevant extract of the same is reproduced as under: "(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service but shall not include:- (a) An activity which constitutes merely- (i) A transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) Such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) A tran....
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....l include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth; (xvi) The aforesaid definition clearly says that the immovable property includes not only "land" but also the benefits "arising out of land". Next, the question then arises whether transfer of development rights is a benefit arising out of land so as to fall under "immoveable property". The word 'benefit arising out of land, has been interpreted in the following judgments:- a) Bahadur & other Vs.Sikandar MANU/UP/0016/1905 b) Ananda Behera Vs. State of Orissa AIR 1956 SC 17 c) SmtDropadi Devi Vs. Ram Das AIR 1974 All 473 d) Sadoday Builders (P) Ltd Vs. Jt Charity MANU/MH/07912011 e) Chheda Housing Development Corpn Vs. Bibijan Shaikh 2007 (2) Bom CR 587 (xvii) The authorization given to a "Developer" to develop the land and sell super-structure in perpetuity shall undisputedly fall within the words "benefit arising out of the land" and shall, therefore, be held to be "immovable property". Once there is a transaction in relation to immovable property, that shall, undisputedly, fal....
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....e that there is a Chartered Accountant Certificate produced by the appellant certifying that the appellant while discharging the service tax liability under Construction of Residential Complex Service has included the value towards the sale of super structure and the lease premium which is the cost of land/amount of consideration for sale of land. We have perused the said notification under which the abatement of 75% is applicable. A bare perusal of Notification No. 29/2010 dated 22.06.2010 is provided below: (a) Gross amount charged by the builder shall include the value of goods and materials supplied or provided or used for providing the taxable service by the service provider. (b) Gross amount charged by the builder shall include cost of land. (c) Builder shall not avail benefit of Cenvat Credit under Cenvat Credit Rules, 2004. (d) Builder shall not avail benefit of exemption under Notification No. 12/2003 dated 20.06.2003. 13.2 No evidence is produced by the department that any of the said four conditions have been violated by the appellant. It is also apparent on record that the appellant earlier availed the Cenvat credit, however the same already stands revers....