2014 (1) TMI 1145 - AT - Service Tax

Waiver of pre-deposit of amounts of Service Tax - Penalties under Sections 76, 77 and 78 - Renting out of immovable property - Benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008 - Held that - if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit - appellants have made out a case for waiver of pre-deposit of amounts involved - Stay granted.

Summary

Issues:
Service Tax liability on individuals as providers of service under renting out of immovable property.

Analysis:
The case involved four applications seeking waiver of pre-deposit of Service Tax liability, interest, and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The primary issue was the Service Tax liability on the individuals as providers of service under the category of renting out of immovable property.

The appellant's advocate argued that the individuals, as co-owners of a building, collectively received rent from a tenant who issued separate cheques to each co-owner. The advocate contended that the amounts received fell within the threshold limit of SSI exemption as per relevant notifications. On the other hand, the Departmental Representative (D.R.) argued that since the property was jointly owned and rented out collectively, the Service Tax liability should be assessed based on the total amount received by all co-owners.

After hearing both sides, the tribunal considered the SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005, as amended by Notification No. 8/2008-S.T., dated 1-3-2008. The tribunal noted that the exemption allowed if the aggregate value of taxable services did not exceed the threshold limit of rupees ten lakhs in the preceding financial year. The tribunal observed that if the cheques were received individually by each appellant, as per the rental agreement, then individually, they could be considered as providers of the service within the exemption limit.

Consequently, the tribunal found that the appellants had established a prima facie case for waiver of pre-deposit of the amounts involved. Therefore, the applications for waiver were allowed, and recoveries were stayed pending the disposal of appeals. The tribunal's decision was based on the specific circumstances of the case and the interpretation of relevant notifications concerning Service Tax liability on renting out of immovable property.