2017 (2) TMI 105 - AT - Service Tax

Definition of AOP - immovable property given on rent by 8 joint co-owners (respondents) - whether these 8 co-owners can be said to be AOP, and whether each co-owner has to be denied exemption or not? - Held that - I cannot find any ground which establishes that the eight individuals who are respondents can be called association of persons through any definition provided by any law, when they have not entered into any agreement to form association of persons . Even the definition of person in Section 3(42) of the General Clauses Act, 1897 states that person shall include any company or association or body of individuals. So, since the definition is inclusive, there has to be an association of individuals to become person under said Section 3(42) of the General Clauses Act, 1897 - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeals by Revenue against Order-in-Appeal, Allegations of Service tax evasion, Ownership of property jointly rented out, Registration for Service tax, Interpretation of "association of persons," Definition of "person" in General Clauses Act.

Analysis:
The judgment deals with 8 appeals by Revenue against an Order-in-Appeal regarding Service tax evasion. The respondents jointly owned a property rented out to a company. Revenue alleged non-registration for Service tax and non-filing of returns. The Original Authority held the respondents as an association of persons and demanded Service tax. The respondents argued that rent was received individually and did not exceed exemption limits. The ld. Commissioner (Appeals) set aside the Order-in-Original based on previous Tribunal decisions. Revenue contended that the respondents constituted a body of individuals under the General Clauses Act.

The Tribunal analyzed the concept of "association of persons" and the definition of "person" under the General Clauses Act. It noted that the respondents did not form an association and each received rent individually. The Tribunal emphasized that for the respondents to be considered an association of persons, there must be an agreement to that effect. Since no such agreement existed, the Tribunal dismissed the appeals by Revenue. The judgment highlighted the inclusive nature of the definition of "person" under the General Clauses Act, requiring an actual association of individuals to qualify as a "person."

In conclusion, the Tribunal ruled in favor of the respondents, stating that the Revenue's grounds did not establish the respondents as an association of persons. The judgment emphasized the need for a formal agreement to form such an association. Therefore, the Tribunal dismissed the appeals by Revenue and granted the respondents consequential relief in accordance with the law.