2013 (9) TMI 253 - AT - Service Tax

Renting out of immovable property appellants contended that they are co-owner of a particular building and have rented out the premises to a person who issues different cheques to all the individuals as they are co-owners - Held that - benefit of SSI exemption Notification grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit - if the cheques for rent are received individually by them. Waiver of pre deposit requirement of pre deposit waived appeal allowed in the favour of assessee.

Summary

Issues Involved:
Service tax liability on individuals as providers of service under the category of renting out of immovable property.

Analysis:
The judgment before the Appellate Tribunal CESTAT Ahmedabad involved the issue of service tax liability on individuals who were co-owners of a building and had rented out the premises. The appellants sought waiver of pre-deposit of service tax liability, interest, and penalties under Sections 77 & 78 of the Finance Act, 1994. The Revenue contended that since the property was jointly owned and rented out collectively, service tax liability should be charged individually. However, the appellants argued that they should be considered individually under the SSI exemption Notification No. 6/2005-ST, as the amount received did not exceed the threshold limit. The Tribunal analyzed the notifications and found that if the cheques for rent were received individually by the appellants, they could be considered as individual providers of the service, and their aggregate value did not exceed the threshold limit, making a prima facie case for waiver of pre-deposit.

The Tribunal considered the submissions made by both sides and interpreted the SSI exemption Notification No. 6/2005-ST dated 1.3.2005, as amended by Notification No. 8/2008-ST dated 1.3.2008. The notification granted exemption of service tax per year if the assessee had not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In this case, the Tribunal found that if the individuals received cheques for rent individually, as indicated in the agreement, they could be considered as individual providers of the service. The Tribunal noted that the notification specified that the aggregate value of taxable services rendered should be considered for exemption, and since individually all the appellants did not exceed the threshold limit, they were eligible for the exemption. Consequently, the Tribunal allowed the applications for waiver of pre-deposit of amounts and stayed recoveries until the disposal of appeals.