2018 (5) TMI 832 - AT - Service Tax

Renting of Immovable property service - the appellant has entered into a separate agreement for providing generators, air conditioners services in the said premises - demand of service tax on this separate agreement - Held that - service tax stand demanded for the period 2007-2008, prior to introduction of service tax on supply of tangible goods. Inasmuch as separate agreement has been entered into by the appellant with their customers so on renting out of immovable property and renting out of equipment, it cannot be said that these are part of the immovable property and hence, there is no justification for raising demand of service tax on equipment under the category of renting out of immovable property. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of service tax on renting of immovable property and equipment
- Separate agreements for renting property and equipment
- Justification for demand of service tax on equipment

Analysis:
The appellant filed an appeal against an Order-in-Appeal regarding the demand of service tax on activities related to renting out immovable property and equipment. The appellant had commercial properties in Gurgaon and New Delhi, providing them on rent under proper agreements with service tax discharged under Renting of Immovable Property. Additionally, a separate agreement was in place for providing generator and air conditioner services in the same premises, for which the department demanded service tax. The Tribunal noted that there were two distinct agreements - one for renting property and another for renting equipment. While the appellant had paid service tax on renting equipment from a specific date, the demand in question pertained to a period prior to the introduction of service tax on the supply of tangible goods. The Tribunal found no justification for raising the service tax demand on equipment under the category of renting out immovable property, as the agreements were separate and distinct.

Furthermore, the Tribunal referenced a similar case, Indo Hong Kong Industries P Ltd. vs. CCE & ST, Delhi, to support their decision. Given the separate nature of the agreements and the timing of the introduction of service tax on tangible goods, the Tribunal concluded that there was no basis to sustain the impugned order. Consequently, the Tribunal allowed the appeal filed by the appellant, setting aside the demand for service tax on equipment under the category of renting out immovable property.