2013 (8) TMI 675 - AT - Service Tax

Renting of immovable property appellant contented that renting out of premises to Bank, BSNL and Post Office does not amount to renting of property for use in course of furtherance of business or commerce Held that - The Service Tax demand on the rent collected from the Bank and BSNL, is legally sustainable - Bank and BSNL are commercial organizations and the appellant has rented out their premises to them - amounts to furtherance of business or commerce - as regards the Post Office, the appellant might have a case and the arguments will have to be considered after examining the provisions of the Indian Post Act. Amount of turnover - whether the turnover of the appellant has exceeded the thresh hold limit under SSI Exemption Notification No. 8/2005 or not is a question of fact and has to be examined Held that - The matter remanded back to the lower appellate authority as the lower appellate authority has not examined any of these facts - for the purpose of examining the thresh hold limit, the gross amount received for renting of immovable property has to be taken into account - appellant being a sugar factory, they must be discharging the Service Tax on GTA services availed by them - such services might also be includable in thresh hold limit and this fact needs to be examined matter remanded back.

Summary

Issues:
1. Liability of Service Tax on renting of immovable property
2. Eligibility for benefit of SSI exemption under Notification No. 8/2005

Issue 1: Liability of Service Tax on renting of immovable property

The appellant, a sugar factory, rented out part of its premises to a bank, BSNL, and Post Office. The department demanded Service Tax on the renting of immovable property, which was contested by the appellant. The lower appellate authority confirmed the demand, stating that the renting to commercial organizations like the bank and BSNL constitutes furtherance of business or commerce, making the Service Tax liability valid. However, regarding the renting to the Post Office, further examination was deemed necessary to determine if it falls under the same category. The Tribunal found the demand on rent from the bank and BSNL to be legally sustainable as it furthers business or commerce, while the issue related to the Post Office required additional scrutiny based on the provisions of the Indian Post Act.

Issue 2: Eligibility for benefit of SSI exemption under Notification No. 8/2005

The appellant claimed eligibility for the benefit of Small Scale Industry (SSI) exemption under Notification No. 8/2005, arguing that their turnover from renting immovable property did not exceed the threshold limit of Rs. 10 lakhs. The Tribunal noted that determining the turnover for the threshold limit involves considering the gross amount received for renting immovable property and any other services provided. As the lower appellate authority did not assess these details, the matter was remanded back for a thorough examination. The Tribunal directed the appellant to provide all relevant information, including details of other services rendered, such as Goods Transport Agency (GTA) services, to ascertain if they impact the threshold limit for SSI exemption. The Tribunal emphasized the need for a comprehensive review by the lower appellate authority to determine the appellant's eligibility for the SSI exemption under Notification No. 8/2005.

In conclusion, the Tribunal allowed the appeal by way of remand, directing a reevaluation of both issues. The stay application was also disposed of in light of the remand decision, emphasizing the importance of a detailed examination of the appellant's turnover and services provided to determine their liability for Service Tax and eligibility for SSI exemption.