2017 (10) TMI 807 - AT - Service Tax

Renting of immovable property service - Revenue is of the view that as the appellants have collectively and jointly let out the property and total rent received on the property is more than the threshold limit as per the N/N. 06/2005-ST dt. 01.03.2005, therefore, the appellants are liable to pay Service Tax - Held that - the identical issue came up before this Tribunal in the case of Anil Saini and Others Vs. CCE, Chandigarh-I 2017 (1) TMI 101 - CESTAT CHANDIGARH , where Tribunal placing reliance in the case of CCE, Nasik Vs. Deoram Vishrambhai Patel 2015 (9) TMI 790 - CESTAT MUMBAI 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. The co-owners of the property cannot be considered as liable to pay Service Tax (jointly or severally) as the Revenue has identified the services provider and the service recipients for imposing the Service Tax liability which are individuals. Therefore, the Service Tax liability is not sustainable. The demand of Service Tax against the appellants is not sustainable as the appellants are entitled to benefit of N/N. 06/2005-ST dt. 01.03.2005 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of Service Tax under renting of immovable property services.

Analysis:
The appeals were filed against the confirmed demand of Service Tax under renting of immovable property services. The appellants collectively received rent from a property and did not pay Service Tax as the amount was within the threshold limit. However, the Revenue contended that as the total rent exceeded the threshold limit, Service Tax was applicable. A show cause notice was issued, and the demand was confirmed with penalties. The first appellate authority upheld the demand, interest, and penalties. The main issue was whether the co-owners of the property could be jointly liable for Service Tax.

The Tribunal referred to a similar case and observed that co-owners of a property cannot be held jointly liable for Service Tax as the Revenue identifies the service provider and recipient individually. The Tribunal noted that the property was jointly owned, and the service tax liability should be individual. The appellants had paid the tax for certain years exceeding the exemption limit on their own initiative. The Tribunal concluded that the demand of Service Tax against the appellants was not sustainable as they were entitled to the benefit of a specific notification.

The Tribunal held that the demand of Service Tax was not sustainable, and the impugned order was set aside. The appeals were allowed with consequential relief. The decision emphasized that co-owners of a property cannot be collectively liable for Service Tax, and individual liability must be determined based on ownership and rental receipts. The judgment provided detailed reasoning based on legal provisions and precedents, ultimately ruling in favor of the appellants.