2014 (12) TMI 787 - AT - Service Tax

Renting of immovable property service - service tax on movable fixtures/movable assets which were transferred to the tenants for using in the facility - Held that - Commissioner (Appeals) took a totally new ground. He has stated that these are all fixtures fixed to earth and therefore cannot be removed and have to be considered as immovable assets. Further he has not revealed the evidence, on the basis of which, he has come to the conclusion. We were also not able to find any evidence for coming to such conclusion. The original authority had relied on trial balance sheet and financial statements to decide that these are movable fixtures. In the absence of any basis to show that the assets for which service tax is being demanded was immovable, we are unable to uphold the impugned order. In the result the impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Denial of CENVAT credit on service tax paid on real estate agent's service.
2. Demand of service tax on movable fixtures/assets transferred to tenants.

Analysis:
1. The appellant's CENVAT credit denial was based on the argument that they paid service tax on maintenance charges before the renting of immovable property service existed, making them eligible for credit on real estate agent's services under Rule 6(5) of CENVAT Credit Rules 2004. The Tribunal found this argument acceptable and appropriate, allowing the appeal to proceed without pre-deposit.

2. Regarding the demand for service tax on movable fixtures/assets transferred to tenants, the adjudicating authority concluded that service tax was payable based on an unspecified explanation in the definition of renting of immovable property service. However, upon review, the Tribunal found no relevant explanation supporting this conclusion. The Commissioner (Appeals) introduced a new ground, considering the fixtures as immovable assets fixed to earth without providing evidence for this assertion. The original authority's reliance on trial balance sheet and financial statements to classify the assets as movable was not substantiated. As there was no evidence to support the classification of assets as immovable, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief for the appellants.

This judgment clarifies the eligibility of CENVAT credit on real estate agent's services and the classification of movable fixtures/assets for service tax purposes, emphasizing the importance of evidence and adherence to legal definitions in tax disputes.