2016 (2) TMI 69 - AT - Service Tax

Renting of farm house - whether appellant is liable to pay service tax under the category of Renting of Immovable Property Service - scope of the lease deed - Held that - As per clause 2(c) of the lease deed, it is mentioned the property is leased out for residential purpose and for the employees of the lessee. We find that the lessee also issued certificate to certify that the premises was never used except for residential purposes. Moreover, electricity bills and property tax returns also support the case of the appellant. Revenue has not produced any contrary evidence to the evidence produced by the appellant. Therefore, prima facie, we are of the view that the demand confirmed under the category of Renting of Immovable Property Service is not sustainable - Stay granted.

Summary

Issues:
- Waiver of pre-deposit of demand of service tax under "Renting of Immovable Property Service"
- Interpretation of lease agreement and applicability of service tax

Analysis:
The case involved the appellant seeking a waiver of pre-deposit of service tax demand related to renting out a farm house under the category of "Renting of Immovable Property Service." The Revenue contended that the renting of the farm house fell under the relevant section of the Finance Act, making the appellant liable for service tax. The appellant argued that the property was used exclusively for residential purposes during the lease period and provided evidence to support this claim, including a certificate from the lessee, electricity bills, and property tax returns.

Upon examination of the lease deed and the evidence presented, the tribunal noted that the property was indeed leased out for residential purposes, as stated in the lease agreement and supported by the documents provided by the appellant. The tribunal found that the Revenue failed to produce any contrary evidence to dispute the appellant's claim regarding the property's use. Additionally, there was no evidence presented by the Revenue to show that the property was let out by the appellant after a certain date.

Based on the findings, the tribunal concluded that the demand for service tax under the category of "Renting of Immovable Property Service" was not sustainable. Therefore, the tribunal waived the requirement of pre-deposit and stayed the recovery of the impugned demand during the appeal process. The decision was made in favor of the appellant, highlighting the importance of examining lease agreements and supporting evidence in determining the applicability of service tax in such cases.