TaxTMI 
TaxTMI 
2025 (8) TMI 1063
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.... the Appellant was issued with a Show Cause Notice No. 318/2012 dated 17.10.2012 issued by the Commissioner of Service Tax, Chennai for the period 2007-08 to 2011-12 for Mandap Keeper Service and Renting of Immovable Property Service from 01.06.2007 to 2011-12 besides proposals for demand of interest and imposition of penalties. 4. The Appellant had filed its reply to Show Cause Notice in their reply dated 22.04.2013 refuting the above said allegations. 5. The Adjudicating Authority, after considering the materials and submissions on record, confirmed the following demands: - i. Demand of service tax of amount of Rs.54,56,641/- under Mandap Keeper service and Rs.2,62,14,788/- under Renting of Immovable Property Service. ii. Interest under Section 75 of the Finance Act, 1994. iii. Penalty of Rs.10,000/- under Section 77 of the Finance Act was imposed for failure to file periodical returns. iv. Penalty of Rs.3,16,71,429/- was imposed under Section 78 of the Finance Act, 1994 but, v. Penalty under Section 76 was not imposed as the penalty had already been imposed under Section 78. 6. Being aggrieved, the Appellant has filed the pre....
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....hich was paid through 19 cheques and duly acknowledged by the Respondent. 8. Per Contra, the Ld. Authorized Representative Mr. M. Selvakumar representing the Revenue, re-iterated the findings in the Order-in-Original and submitted that the appeal is liable to be rejected. 9. We have heard both sides and considered the rival submissions including the evidence available on appeal records and the case laws relied upon. 10. The issue that arises for consideration is whether the Appellant is liable to pay service tax on Renting of Immovable Property and Mandap Keeper Service. 11. We observe that the issue is no longer res-integra as it has been held by the Tribunal Chennai in the case of The Commissioner of Namakkal Municipality, The Commissioner of Palani Municipality and Others Vs. Commissioner of Central Excise, Salem [F.O.Nos. 40488-40495/2024 dated 29.04.2024] that applicability of service tax on Renting of Immovable Property Services and other services needs to be re-determined by the Adjudicating Authority on the basis of observations and judgments rendered by the jurisdictional High Court. The relevant portion of the above Tribunal decision is extracted below for rea....
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....d Senior Standing Counsel for the respective respondents in the respective Writ Petitions. 23. Since the dispute pertains to the period prior to July 2012 and thereafter, I shall deal with the issues in two parts, i.e. for the period prior to July 2012 and for the period after July 2012. The period prior to 2012 is partly covered by W.P.No 12489 of 2018. 24. in WP.No.12489 of 2018, the petitioner has challenged Orderin Original No 05/2018-ST in C.No V/ST/15/21/2018 ST.Adj. Dated 06.04.2018. For the period prior to July 2012, the demand is confined to levy of tax under Section 65(105)(zzzz) of the Finance Act, 1994 read with definition of "Renting of Immovable Property Services under Section 65(90a) of the Finance Act, 1994 25. From the category of service and income generated from the petitioner, it appears that the petitioner was renting out the stops in bus stand and other areas where it was having immovable properties." 26. Service Tax on Renting of Immovable Property Service was introduced in 2007 vide 65(105) (2222) of the Finance Act, 1994. The expression of renting of immoveable property was defined in Section 65 (90a) of the Finance Act, ....
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.... (v) vacant land given on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce". Explanation 2 For the purposes of this sub-clause, and immovable property, partly for use in the course of 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 of furtherance of business commerce. "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 skills orknowledge or lessons on any subject of field, other than a commercial, training or coaching centre. Explanation 1 For the purpose of this clause "foruse in the course of furtherance of business or commerce includes use of immovable property as factories, office buildings, warehouses theatres, exhibition halls and multiple- use buildings; Explana....
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....rson", le, by a person other than the owner, such service was liable to service tax 33. The expression "any other person" can only mean any other person other than the owner of the property Therefore, owner of the immoveable property is not liable to pay tax under Section 66 of the Finance Act, 1994 for the period up to 30.06.2012 34. An owner can be held liable to pay tax for renting of immoveable property service only if there was an appropriate notification issued under Section 68(2) of the Finance Act, 1994 read with Rule 2(1)(d) of the Service Tax Rules, 1994. 35. If the legislature intended to include both owner and a person other than the owner of the property in Section 65(105)(zzzz) of the Finance Act, 1994, the legislature would have simply adopted a wider expression such as "any person" instead of "any other person" The expression "any other person" restricts the scope of exposure to levy of service tax to a different class of service providers It is perhaps for this purpose, the expression any other service in relation to such renting has been used in the Section to indicate service tax has to be charged only where there is a value addition ....
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....dhachalam Municipality for the period April 2012 June 2012 deserves to be allowed. To that extent impugned Order-in-Original No. 5/2018-ST in C No V/ST/15/21/2017-ST. Adjn, is liable to be quashed straight away 6.5. In the very same judgement the Hon'ble High Court has considered the demand proposed and confirmed for the period after 30.06.2012 also. It was held that a Government or local authority is exempted from payment of service tax on Renting of Immovable Property Service being services rendered in terms of their sovereign right to business entities. Section 66D (a) - (d) of the Finance Act 1994 reads as under: 66D. Negative list of services. The negative list shall comprise of the following services, namely:- (a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere- (i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) trans....
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....t, 1994 as in force with effect from 01.07 2012. 55. However, for such support services, service tax was payable by the recipient of such service in terms of Rule 2(1)(d)(E) of the Service Tax Rules, 1994 as amended by notification No.36/2012-ST dated 20.6.2012 with effect from 1.17.2012 56. For support service provided, the recipient was liable to pay tax on reverse charge basis under Rule 2(1) (d)(E) of the Service Tax Rules, 1994 as amended by notification No. 36/2012-ST dated 20.06.2012 as in force from 01.07.2012 57. Therefore, the Petitioner Municipalities can be held liable to pay service tax only for service specified in Sub-Clauses in (i), (ii) and (iii) of Clause (a) of Section 66D of the Finance Act, 1994. 58. As far as renting of immoveable property is concerned, though under Rule 2(1)(d)(E) of the Service Tax Rules, 1994, service tax is payable by the service provider, it has to be held that if such services are provided by a Government or Local Authority, they are exempted under Section 65D(1)(a) of the Finance Act, 1994 as amended and as in force from 01.07.2012. Only ancillary service provided by a third party towards renting of i....
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....lidity of Section 65(105)(zzzz) of the Act, in Paragraph No 56, the Hon'ble Division Bench observed that it is open to the local body to pass on the burden to the recipient of the service. It is necessary to note that among the petitioners in that batch of writ petitions, there were a few local bodies also. That is why, in R. Nambi vs. Tenkasi Municipality (2015) (37) STR 696 (Mad, a learned Judge of this Court observed as follows "13. At the out set it has to be pointed out that the petitioner it not a service provider The first respondent Municipality is the service provider, who has been registered with the Department. The onus is on the first respondent Municipality to remit the service tax. In turn, the first respondent Municipality has demanded the same from the petitioner, who is their licensee in respect of four contracts, wherein the petitioner has been given license to collect fees. Furthermore, the petitioner has not challenged the validity of the provisions of the Finance Act nor the notification issued by the second respondent and in such http www.judis.nic in circumstances a challenge to a demand notice issued by the service provider under whom the petiti....
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....ervice tax for rendering "renting of immovable properties" service mandap keeper services etc, then, it is not for me to go into the issue once again. Judicial discipline demands that I respectfully follow these binding precedents http://www.judis.nic.in 7. It is to be noted that the Hon'ble High Court in the case of Madurai Corporation has followed the decision of the Hon'ble High Court rendered in batch case of G.V. Matheswaran Vs. UOI 2014-TIOL-2545-HC-MAD-ST. In the case of G.V. Matheswaran the constitutional validity of the levy of service tax of renting of immovable property was under challenge. The main ground raised was that it is a tax on immovable property and that Centre has no powers to levy tax as immovable property (land) falls within the State List. There were decisions passed by various High Courts upholding the validity of the provisions of Section 65 (105) (zzzz) and Section (90a) of the Finance Act. [Shubh Timb Steels Ltd. Vs. UOI (2011) 37 VST 46 (P&H), Utkal Builders Ltd, Vs. UOI 2011 (22) STR 257 (Ori), Entertainment World Developers Ltd. Vs. UOI 2012 (25) STR 231 (M.P), Home Solutions Retails (India) Ltd. Vs. UOI 2011 (24) STR (129) Del (FB) Hom....
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....d in the Cuddalore Municipality case referred to (supra) is the subject matter of challenge in a writ appeal. He would also submit that a contrary view has been taken by another learned single Judge of this Court in another batch of writ petitions in WP (MD) Nos 7599 of 2018 etc batch in its decision dated 9-9-2020. According to him in the said decision, it has been held that a Municipality is liable to pay ServicеТаx. 7. The learned Standing Counsel for the respondent would also submit that the decision of the Hon'ble Supreme Court in the case of Krishi Upaj Mandi Samiti v. Commissioner of C Ex &S.T. Alwar reported in 2022 GSTL 129[2022] 135 laxmann com 354 (S.C.) applies to the case of the petitioner and therefore they areliable to pay Service Tax as demanded under the impugned order.However the same is disputed by the Leamed Counsel for the petitioner who would submit that the said decision is not applicable to the case of the petitioner. The matter will have to be examined by the respondent. Admittedly, the Cuddalore Municipalily case rendered by a Leamed Single Judge of this Court referred to (supra) has not been considered by the respondents in the ....