2017 (5) TMI 895 - AT - Service Tax

Renting of Immovable Property Services - benefit of N/N. 06/2005-ST dated 01.03.2005 - property owned jointly - Revenue is of the view that as the appellants have jointly let out the property and total rent received on the property is more than threshold limit of N/N. 06/2005-ST dated 01.03.2005 ibid, therefore, the appellants are liable to pay service under the category of Renting of Immovable Property Services - 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 , where on similar issue benefit was extended - the demand of service tax is not sustainable as the appellants are entitled for benefit of N/N. 06/2005-ST dated 01.03.2005 ibid - appeal allowed - decided in favor of appellant.

Summary

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

Analysis:
The appellants contested the demand of service tax on the rent received from a jointly owned property, arguing that each co-owner received rent individually below the exemption limit of Notification No. 06/2005-ST dated 01.03.2005. The Revenue claimed that the total rent exceeded the threshold, making the appellants jointly liable for service tax. The Tribunal referred to a similar case and observed that service tax liability arises on jointly rented property. The first appellate authority considered the ownership structure and rental receipts, concluding that co-owners should be treated individually for service tax liability. The authority noted that each appellant received rent below the exemption limit for certain years and paid service tax for other years before any investigation, indicating no intention to evade tax.

The Tribunal upheld the first appellate authority's decision, stating that co-owners cannot be jointly liable for service tax. It emphasized the need to identify the service provider and recipient separately. Consequently, the demand for service tax was deemed unsustainable, and the appellants were granted relief under Notification No. 06/2005-ST dated 01.03.2005. The appeals were allowed, setting aside the impugned orders and providing consequential relief if applicable.