TaxTMI 
TaxTMI 
2025 (8) TMI 1858
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....ies under Section 75 and 77(2) of the Finance Act, 1994. 3. The Ld. Advocate M.N. Bharathi has argued for the appellant and submitted that the Appellant is an institution of self-Government constituted under Article 243 Q of the Constitution of India, that being a government machinery, no intention to evade payment of service tax could be attributable to them. The delay caused in payment of service tax was due to the need of obtaining permission from the higher authorities. He would submit further that the fee collected for using / occupying the open land / space have to be excluded from the computation of taxable value. Referring to the Annexure I to the SOD, he submitted that the total value shown therein includes an amount Rs.31,30,203/- relating to past arrears which were already included in the periodical Show Cause Notices issued and so, this amount needs to be excluded for computation of demand of service tax. He would submit that amounts collected relating to telephone booth slaughterhouse, bunk stalls and cutting of trees are not relating to 'Renting of Immovable Property Service' and so needs to be excluded. According to the Ld. Advocate, the following table gi....
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.... Show Cause Notices issued for earlier period under the Renting of Immovable Property Service and also argued for reduction relating to amounts collected towards slaughterhouse, bunk stalls, telephone booth and also cutting of trees. The Appellant has not contested the taxability under Renting of Immovable Property Service or Mandap Keeper Service but only against invoking extended period and imposition of penalty. 8. The main issue that is required to be decided in this case is relating to service tax on Renting of Immovable Property Service rendered by the Appellant. In the Appellant's own case, the Tribunal Chennai vide The Commissioner of Namakkal Municipality Vs. Commissioner of Central Excise, Salem [F.O.Nos. 40488-40495/2024 dated 29.04.2024] has held as follows: - "6.1 The common issue that arises for consideration in all these appeals is whether the demand of service tax under the category of 'Renting of Immovable Property Service' as well as other services is sustainable against appellants (Municipalities). 6.2 The Hon'ble High Court of Madras in the case of Cuddalaore Municipality (supra) had analysed the matter in detail for the peri....
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....d by W.P. No 12489 of 2018. 24 in WP.No.12489 of 2018, the petitioner has challenged Order in 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, 1994 27. The High Court of Delhi in Home Solutions Retail India Ltd. & Others Vs. UOI, 2009 (237) E.L.T 209 (Del) by its order dated 18.04.2009 however struck down this levy by observing that the renting of immovable property for use in the course of furtherance of business or commerce did not involve any value addition and the....
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....ial 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 or knowledge or lessons on any subject of field, other than a commercial, training or coaching centre. Explanation 1 For the purpose of this clause "for use 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; 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 and immovable property, irrespective of the transfer of possession or control of the said immovable property. 30. The Delhi High....
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.... 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 36. May be renting of immoveable property service partly overlapped with the taxable service of a "real estate agent This was because there was no definition for the expression "service" till July, 2012 and therefore there was scope for such overlap in the definition. The definitions are reproduced below-....
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....he 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) transport of goods or passengers; or (iv) any service, other than services covered under clauses (i) to (iii) above, provided to business entities; (b) services by the Reserve Bank of India; (c) services by a foreign diplomatic mission located in India; (d) s....
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....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 immovable property of a non-governmental or local body will be able to pay service tax like any other service provider. Therefore, service tax is payable by the service provider himself. 59. That apart, it is seen that some of the services provided are also exempted under the Mega ....
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.... 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 petitioner is a licensee has to necessarily fail. Nevertheless, since this Court heard the learned counsel for the petitioner in great length, this Court proposes to consider the submissions made by the parties as regards the jurisdiction to levy the service tax. 14 Renting of im....
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.... 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) Home Solution II]. In these cases, there was no specific discussion upon the issue whether 'local authority' would be liable to pay service tax on Renting of Immovable Property services. There was also no discussion as to the definition of person; in the case of Madurai Corporati....
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.... 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 Service Tax. 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 impugned order and therefore, necessarily the impugned order has to be quashed and the matter will have to be remanded back to the respondent for fresh consideration on merits and in accordance with law within a timeframe to be fixed by this Court 8. For the foregoing reasons, the ....