2017 (6) TMI 1073 - AT - Service Tax

Renting of Immovable property service - appellant had let out housing quarters and other premises on rent to its contractors and other persons - whether the service provided by the appellant comes within the scope of taxable service? - Held that - Renting of premises for residential purposes is not included within the scope and preview of such taxable service, for the reason that such renting is not in connection with business or commerce. However, a deeming fiction has been created in the explanation-2 appended to the said definition, providing that use of immovable property partly for business or commerce and partly for residential or any other purposes should be construed as immovable property for use in course or furtherance of business or commerce. The housing quarters are located at a different place, than the other premises was not considered by the authorities below - the submission of the appellant that for the purpose of computation of threshold exemption limit, the service tax paid on the GTA Services in the capacity of recipient of service should not be considered, has not been taken into consideration by the authorities below - the present matter should also go back to the original authority for passing the reasoned and speaking order on the basis of documents to be produced by appellant - appeal allowed by way of remand.

Summary

Issues:
1. Whether renting of housing quarters and other premises by the appellant constitutes a taxable service under Renting of Immovable property service?
2. Whether the appellant is eligible for threshold exemption under Notification No.6/2005 for the service tax liability?

Analysis:

Issue 1:
The appeal challenged the order confirming service tax demand against the appellant for letting out housing quarters and other premises on rent to contractors and individuals. The Department contended that the activities fell under the taxable category of Renting of Immovable property service. The appellant argued that renting housing quarters to contractors for their workers' residence is outside the taxable service scope. Additionally, the appellant claimed eligibility for threshold exemption under Notification dated 01.03.2005. The Tribunal noted that renting immovable property for business or commerce is taxable, but residential renting is excluded unless used partly for business. The appellant's argument that the housing quarters were separate from other premises was not considered, leading to the demand confirmation. The Tribunal found that the appellant's submission regarding the threshold exemption calculation was also overlooked. Referring to a similar case, the Tribunal decided to remand the matter for fresh adjudication based on the evidence to be presented by the appellant.

Issue 2:
The appellant's contention regarding eligibility for threshold exemption under Notification No.6/2005 was crucial in the appeal. The Tribunal observed that the authorities did not consider the appellant's argument that the service tax paid on GTA Services should not be included in the exemption limit calculation. This oversight, coupled with the failure to address the location distinction between housing quarters and other premises, led to the decision to remand the matter for a detailed examination by the original authority. The Tribunal emphasized the need for a reasoned and speaking order based on the appellant's submissions and relevant documents. Consequently, the impugned order was set aside, and the appeal was disposed of with a direction for fresh adjudication.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and the Tribunal's decision to remand the matter for further consideration based on the evidence and submissions presented by the appellant.