2015 (12) TMI 264 - AT - Service Tax

Waiver of pre deposit - Renting of immovable property service - Recover of lease rent and development charges - Held that - It is seen from the lease agreement that RIICO acquired the land on 99 year lease. When they themselves acquired the land on lease, their contention that they had sold the plots to various persons is clearly untenable because when they themselves were lessee, they had no power to sell. Indeed, the lease agreement between RIICO and plot holders clearly mentions that the plots are being leased for 99 years. When the plots have been leased, the amount recovered as per lease agreement howsoever named becomes liable to service tax so long as the amount recovered is in relation to and for leasing those plots. The appellants cited the judgment of CESTAT in the case of NOIDA vs. CCE, NOIDA (2014 (1) TMI 1203 - CESTAT NEW DELHI) which is not applicable, as in that judgment only the premium amount charged was held to be not liable to tax. In the present case, there is no such premium amount involved. - appellants have not been able to make out a prima-facie case in their favour on merit - Partial stay granted.

Summary

Issues involved: Leviability of service tax on lease rent and development charges recovered by the appellants from allottees of the plots under the category of renting of immovable property service classifiable under section 65(105) (zzzz) of the Finance Act 1994 during the period 01.04.2010 to 31.03.2012.

Analysis:
The issue at hand in this case before the Appellate Tribunal CESTAT NEW DELHI revolves around the leviability of service tax on the lease rent and development charges collected by the appellants from the allottees of plots. The appellants argued that it was not a lease but a sale to the plot holders, and that development charges should not be included for service tax purposes, emphasizing that there was no suppression or wilful misstatement on their part. However, the adjudicating authority found that the amount recovered for leasing the plots was indeed subject to service tax, as per the amended definition of immovable property. This definition included vacant land given on lease or license for construction of buildings or temporary structures for business or commerce. Consequently, the adjudicating authority upheld the demands for service tax, interest, and penalties.

Upon reviewing the lease agreement between RIICO and the plot holders, it was evident that RIICO had acquired the land on a 99-year lease. The contention by the appellants that they had sold the plots was deemed untenable since they were lessees themselves and did not have the authority to sell. The lease agreement clearly stated that the plots were leased for 99 years. Therefore, any amount collected in relation to leasing those plots was deemed liable to service tax. The appellants referenced a previous judgment of CESTAT involving NOIDA vs. CCE, NOIDA, but it was deemed inapplicable to the current case as there was no similar premium amount involved here.

In light of the arguments presented, the Appellate Tribunal found that the appellants failed to establish a prima facie case in their favor on merit. The plea regarding the non-invocability of the extended period was determined to be subject to further analysis at the final hearing. Consequently, the Tribunal ordered a pre-deposit of 50% of the adjudicated service tax liability along with proportionate interest within six weeks. Compliance was to be reported by a specified date, and recovery of the remaining liabilities was stayed pending the appeal. Failure to make the pre-deposit would result in the dismissal of the appeal.