TaxTMI 
TaxTMI 
2025 (11) TMI 1197
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....inance Act were also invoked. 3. We have heard the two sides and perused the case records. In view of the variety of issues involved we examine and discuss below issuewise the contentions raised by the two sides and record our findings and assessment in the matter :- Issue 1 : 4. Long term lease premium, alleged to be classified as rent : The appellant has stated that the Govt. of West Bengal through the Chairman, Bidhannagar Municilpality allotted to them 41 cottahs of land for which the appellant had deposited with the Government an amount of Rs.4,10,000/- on 12.05.2005, towards consideration of the premium or salami for execution of lease deed by the Government in favour of the lessee. Subsequently an indenture dated August 12, 2008 was made with the Governor of West Bengal as the lessor. The appellant lessee was thus granted lease of the said land for a period of 999 years. Before the execution of the said indenture the lessee had entered into a joint venture agreement dated March 19, 2008, with M/s. Meharia Prime Builders Pvt.Ltd. (confirming party) and the appellant to act as developers jointly on 50:50 joint venture basis for development of the said land into Bai....
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....ayment of lease rent by the original lessee i.e. Bidhan Nagar Municipality to the original lessor i.e. the Governor of West Bengal in accordance with the indenture for lease dated 12.08.2008. We also note that the rights allocated do provide for re-assigning them to a third person as well. 7. It is submitted before us that such an agreement entered into by the appellant with various parties (individuals/enterprises) were entered before the issuance of the completion certificate by the competent authority of the said commercial complex that was developed by the appellant on the leasehold land. The fact that the said agreement further contains provision for sub-lease for a period of 90 years with entitlement for renewal of the sub-lease for 9 successive terms of 90 years each and that this sub-lessee was empowered for making further assignment and/or nomination of sub-lease in favour of any other person who would step into the shoes of sub-lessee reveals the nature of the agreement itself, as provisioning of construction services upon leasehold land together with assignment of rights in the proportionate undivided share in the leasehold land underneath the building by the appellan....
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.... 1994, as amended." 10. The adjudicating authority in Para 1.13 of the order has observed that upon scrutiny of the ST-3 Returns, it was noticed that the appellant had availed 75% abatement for provisioning of such services and has held that "with no right to sale the property in terms of the lease agreement dated 30.06.2009. In attempt to connote the said activity as sale is ultra vires and such availment of abatement is outside the ambit of law". He has therefore considered the full amount earned by the appellant towards computation of taxable value and therefore confirmed a demand for Rs.2,65,62,003 crore. 11. In support of their proposition the appellant has strongly contested and emphasized that the said payments were only one time payment received before or at the time of execution of the agreement and were upfront lease premium or salami paid by the lessee to the lessor. There were no periodic/regular payments towards enjoyment of the right to use of the leased property, which was assigned post development and construction of office/complex/civil structure etc. 12. It is thus imperative that the agreement is gone through, article by article. A study thereof reveals ....
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....tions are permanently assigned in favour of the sub-lessee (assignee), the property would not return to the appellant, it thus cannot be considered as a lease for "Renting of Immovable Property" service. Once due stamp-duty has been levied and paid on the value of the leased property, the transaction would move into the category of sale and not service. Thus, we hold that the impugned transaction cannot be levied to Service Tax under the category of Renting of Immovable Property Service, contrary to what has been held by the ld.adjudicating authority. 14. We note that the issue of taxability of long term lease is further no more res integra and has come to be settled by a series of judgements of the Tribunal and the higher judiciary. Thus in the case of Greater Noida Industrial Authority v. CCE & ST [2014 (9) TMI 306 (CESTAT-New Delhi)], to a question of leviability of Service Tax on the lease rent and one time premium charged in respect of long term leases, it was categorically held that Service Tax under Section 65(105(zzzz) read with Section 65(90a) cannot be charged on the premium or salami paid by the lessee to the lessor for transfer of interest in the property from the le....
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....le only on the rent whether it is charged periodically or at a time in advance. In these appeals, in the show cause notice dated 19.03.212 issued by the Addl. Director, DGCEI, New Delhi, service tax has been demanded only on the lease rent and not on the premium amount while in the subsequent show cause notice dated 17.10.2012 issued by the Commissioner of Central Excise and Service Tax, Noida, the amount of premium has also been included in the lease rent for the purpose of charging of service tax for which no valid reasons have been given. Therefore, the order-in-original dated 30.04.2013 confirming the service tax demand on the premium amount is not correct and to this extent, the service tax demand would not be sustainable." 15. Likewise the Bombay High Court in the case of City & Industries Development Corporation of Maharathtra Ltd. v. C.S.T., Mumbai [2014 (11) TMI 127 (Bom.)] while allowing waiver of pre-deposit of duty liability, had gone by the view of the Principal Bench of the Tribunal in the aforestated case of Greater NOIDA to the effect of levy of Service Tax on the quantum of lease and not on the lease premium. 16. Having submitted that the said payments were i....
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....ty. 18. It is thus amply clear that Service Tax on 'Renting of Immovable Property' as the name implies is payable on the rent. The appellant in the instant case has not received any amount by way of rent and the only amount received is towards one time payment of sub-lease premium for sale of leasehold rights. Obviously as brought out hereinbefore there is a difference between premium/salami and the periodic payment of rental lease. The two terms cater to different connotations of financial transactions. These terms have also been a subject matter of consideration by the Hon'ble High Court of Madras in the case of A.R. Krishnamurthy and A.R. Rajagopalam v. CIT [1982 (133) ITR 922 (Mad.)] which clarified that transfer price paid for transfer of possession or the right to enjoy property is called premium or salami and periodical payments made for continuous use of property under lease is called rent. The fact that the appellant received only one time payment is therefore certainly premium and the said premium received cannot be considered as rent. The difference between the two terms "premium" and "rent" was also considered by the Hon'ble Apex Court in the case of Commissioner of ....
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....or the transfer of the right a premium of Rs. 2,25,000/- had to be paid to the lessor and for using the estates the lessee had to pay an annual rent of Rs.54,000/-. Both the premium and the rent were payable in instalments in the manner provided in the document. The parties were businessmen presumably well-versed in the working of tea estates. They must be assumed to have known the difference between the two expressions "premium" and "rent"; and they had designedly used those two expressions to connote two different payments. The annual rent fixed was a considerable sum of Rs. 54,000 and the premium, when spread over 10 years, would work out to Rs. 22,500 a year. There is no reason, therefore, to assume that the parties camouflaged their real intention and fixed a part of the rent in the shape of premium. The mere fact that the premium was made payable in instalments cannot obviously be decisive of the question, for that might have been to accommodate the lessee." This judgement clarifies that while the Premium or Salami is a one-time payment, the 'rent' is payable at regular intervals. It also recognizes the fact that in trade and commerce, twin practice of payments on account ....
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....e designated car parking area, to their customers, in lieu of a certain consideration. Taking shelter of the explanation inserted in law vide Finance Act, 2008, in the definition of 'Renting of Immovable Property' clarifying that 'Renting of Immovable Property includes allowing or permitting the use of space in the immovable property irrespective of transfer of possession or control and as the parking lots were immovable, right to use of which was permitted by the appellant, the ld. adjudicating authority upheld the liability to Service Tax on the said count. 23. We find that the aforesaid issue stands settled by the decision of the coordinate bench of this Tribunal in the case of South City Projects (Kolkata) Limited v. Commissioner of Service Tax (Service Tax Appeal No.70037 of 2013) [Final Order No.76534/2024 dated 23.07.2024]. The Tribunal has categorically held therein that the land used for parking purpose is not chargeable to tax under the category of 'Renting of Immovable Property' service. As noted from records the appellant in terms of sub-lease agreement rendered construction service in addition to commercial space that were sold to their clients. The appellant furthe....
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....e buildings, warehouses, theatres, exhibition halls and multiple-use buildings: Explanation 2. For the removal of doubts, it is hereby declared that for the purpose of this clause "renting of immovable property includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property; In terms of Section 65 (105)(zzzz), any service provided or to be provided to any person, by any other person, by renting of immovable property or any other service in relation to such renting, for use m the course of or, for furtherance of, business or commerce is a 'taxable service Explanation 1. For the purpose of this subclause, "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) but does not include ....
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....ld.adjudicating authority has canvassed the view that the meaning of sponsorship includes naming an event, if the sponsor was displaying sponsor company's logo/trade name and that the "Mela" was an event where the name of the taxpayer was on display at the main gates of the Mela. 28. The appellant has submitted before us that they had incurred an amount of Rs.10.00 lakh towards advertisement expenses. They submit that the Bidhannagar Mela Utsav 2013 prescribed advertisement tariff for which a rate schedule was notified. A copy of the said tariff chart has been enclosed with the Paper Book submitted. The same is scanned below :- 29. It can be noted from the aforesaid pamphlet issued by the Bidhannagar Municipality, that it invited public advertisements at a prescribed rate schedule for the Magazine/Souvenir to be released on the occasion. The appellant has contended that by mistake the accountant of the appellant while preparing the voucher inadvertently recorded the expenses as sponsorship as against the narration of the description as an advertisement. The Ld. Counsel for the appellant has submitted that it was the data entry operator, who had erroneously used the words spon....
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....ntant Certificate. The appellant has further submitted that a major amount thereof (Rs.7,97,58,000/- pertaining to M/s.Tridev Shoppers Pvt.Ltd.) was not realized/receivable as the agreement with the said party was cancelled within the next few days itself. Cancellation letter dated 26.04.2013 is placed on record. 31. We note that the appellant has discharged their Service Tax liability on these debts in the year in which the amount was realized in respect of the said debtors and has since been paid to the department. Further, no tax can be called for, on the cancelled sum. Since the said amount stands paid to the department there is no case for its demand afresh and its confirmation subsequently. However, the appellant would be liable to pay interest at applicable rates in terms of Section 75 of the Act, on the aforesaid amount as realized from sundry debtors, from the date of accrual/date on which entries were recorded. Issue 5 : 32. Amount collected towards extra work for setting up transformers from WBSEB :- It is the contention of the appellant that an amount of Rs.65,96,975/- was collected towards extra work for setting transformers and the same credited in the pro....
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....ious parties towards the extra work of setting up of the transformers. He also states that the observations of the ld.adjudicating authority comparing the amount received towards extra work for setting up of transformer with the amount paid towards extra work for DG set was not a correct observation, as it considered the collection without taking note of the expense. For the DG Set, it is the case of the appellant that an amount of Rs.69,43,175/- was collected towards an actual expense of Rs.1,14,26,477/-. They have also furnished the Chartered Accountant Certificate to this effect showing the aforesaid amounts. We thus find no fault in the aforesaid pleadings of the appellant and for services rendered as pure agents are inclined to give them the benefit for purpose of computation of tax. Under the circumstances no tax liability would survive on this score. Further, the ratio of the law as enunciated by the coordinate bench of this Tribunal in the case of Vardhman Developers v. Commissioner, CGST [(2022) 136 taxmann.com 330 (Tribunal)] is squarely applicable under the circumstances, wherein the Tribunal ruled that the amount collected by the appellant as a pure agent for disbursing....