2017 (1) TMI 101 - AT - Service Tax

Renting of Immovable Property Services - appellants were co-owners of property and received the rent separately as per their share in the property - Notification No. 06/2005-ST dated 01.03.2005 - amount of rent within threshold limit or not? - Held that - the issue has already been dealt by this Tribunal in the case of CCE, Nasik Vs. Deoram Vishrambhai Patel 2015 (9) TMI 790 - CESTAT MUMBAI wherein this Tribunal has held that the ownership of the Property and providing of taxable renting of immovable Property by the four appellants in this case is in their individual capacity and, therefore, their tax liability should have been determined by considering their individual rental receipts and not collective one, benefit on notification was extended. For the subsequent period the appellants have been granted the benefit of the Notification No. 06/2005-ST dated 01.03.2005 ibid. The demand of service tax is not sustainable as the appellants are entitled for benefit of Notification No. 06/2005-ST dated 01.03.2005 ibid - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against demand of service tax under Renting of Immovable Property Services
2. Interpretation of Notification No. 06/2005-ST dated 01.03.2005
3. Liability of co-owners for service tax on jointly rented property

Analysis:
The appellants contested the demand of service tax under Renting of Immovable Property Services based on jointly letting out property and individual ownership shares. The Revenue argued that total rent exceeded the threshold limit of Notification No. 06/2005-ST dated 01.03.2005, making the appellants liable for service tax. The Tribunal referred to a previous case to determine the issue, emphasizing that jointly owned property rented out triggers service tax liability. The appellants presented evidence of individual ownership and rental receipts, showing that each received amounts below the exemption limit for certain years. They paid service tax for years exceeding the limit before any notice. The Tribunal found that co-owners cannot be jointly liable for service tax and upheld the benefit of the notification for the appellants. Consequently, the demand for service tax was deemed unsustainable, and the impugned orders were set aside, allowing the appeals with any consequential relief.

This judgment highlights the importance of individual ownership shares in determining service tax liability on jointly rented properties. It clarifies the application of Notification No. 06/2005-ST dated 01.03.2005 and the significance of rental receipts falling below exemption limits. The Tribunal's decision underscores the need to establish individual tax liability based on ownership shares and rental receipts, preventing joint imposition of service tax on co-owners.