2013 (12) TMI 625 - AT - Service Tax

Demand of Service tax - Availment of CENVAT Credit - Renting of immovable property - Renting of parking space available in mall - CENVAT Credit for processing of loan taken by the construction of mall - Held that - applicant has appointed an agent M/s Building Control Solutions Pvt. Ltd. for collecting parking charges from the customers who were visiting their mall and parking their vehicles in the parking slots provided by the applicant. The receipts are issued by BCS in name of applicant and applicant is paying management fees to BCS. The clients parking their vehicles in the parking area are of two types firstly the shop owners who own their shops in the mall and the secondly the visitors who visit the mall for shopping, food, movie, leisure etc. Property taken on rent if used for business or commerce purposes is Prima facie liable to service tax on the rental income. In the present case we notice that out of total income of ₹ 8,42,40,810/- during the period 2007-08 to 2009-10 the monthly parking income amounting to ₹ 22,51,755/- only pertains to those clients who are having shops in the mall and similarly out of total income parking of ₹ 3,88,45,204/- in year 2010-11 amount of ₹ 9,63,645/- only pertains to the monthly parking income in respect of parking space provided to the shop owners. We therefore are of prima facie view that service tax is payable on this parking income pertaining to the parking service provided to shop owners who own shops in the mall. Construction of mall the applicant has taken loan which was converted into corporate loan in February 2008 and bank charged processing charge for such conversion of loan and the applicant has availed the Cenvat Credit amounting to ₹ 12,17,460/- on such loan processing charges. We find that Cenvat Credit of processing of loan taken by the construction of mall which is immovable property is prima facie not available. Applicant does not have a strong case for waiver of pre-deposit in respect of Cenvat Credit availed by them on processing charges of loan taken by them for construction their mall - Conditional stay granted.

Summary

Issues:
1. Whether the income from providing parking space is taxable under Renting of Immovable Property Services.
2. Whether Cenvat Credit on loan processing charges for constructing a mall is permissible.

Issue 1:
The case involves M/s. Select Infrastructure Private Ltd. seeking waiver of pre-deposit and stay of recovery of service tax and penalties imposed under the Finance Act, 1994. The primary contention is whether the income received from providing parking space is taxable under Renting of Immovable Property Services. The Revenue argued that the parking income earned by the applicant from renting parking space to customers is taxable. The Tribunal analyzed the definition of taxable service during the relevant periods and found that income from parking space provided to shop owners in the mall is liable to service tax. The Tribunal directed the applicant to deposit the service tax on parking income from shop owners for the specified period along with interest as pre-deposit.

Issue 2:
Regarding the Cenvat Credit availed on loan processing charges for constructing the mall, the Tribunal found that the credit on processing charges of the loan taken for constructing immovable property is not prima facie available. The applicant was directed to deposit the Cenvat Credit amount and the service tax on parking income from shop owners within a specified period to avail waiver of pre-deposit and stay of recovery of the remaining dues until the appeal's disposal.

In conclusion, the Tribunal ruled in favor of the Revenue's position that the income from providing parking space to shop owners in the mall is taxable under Renting of Immovable Property Services. Additionally, the Tribunal held that the Cenvat Credit on loan processing charges for constructing the mall is not permissible. The applicant was directed to make specified deposits to avail waiver of pre-deposit and stay of recovery of the balance dues pending the appeal's disposal.