2019 (3) TMI 870 - AT - Service Tax

Renting of Immovable Property service - Appellant had received the rent for their premises - period October, 2011 to September, 2012 - Held that - It is evident that the services will not include any building used for residential purpose. From the details submitted by the appellant before the jurisdictional Superintendent, it is seen that the bulk of rent received is claimed towards rent from the properties in residential use. The certificates indicate that the usage of quarters was for residential purpose only. It cannot be said that such premises were partially used for residential purpose and partially for commercial use. Admittedly, these certificates were not produced either before the original adjudicating authority or before Commissioner (Appeals), but the appellant, vide his letter dated 13.10.2012, addressed to the jurisdictional Superintendent had given the bifurcation about the property being used either for commercial or residential purpose - It is clear that none of the properties were used partially for residential and partially for commercial use. There is nothing on record to show that the Department has carried out any verification into the submissions made by the appellant. Nothing has been brought on record to falsify the claim of the appellant. The rent received for use of premises for residential purpose cannot be levied to service tax under the category of renting of immovable property . However, in respect of rent received for use of premises for commercial use is liable for payment of service tax. However, it is claimed that the total rent received will be far below the threshold exemption - Thus, for renting out of commercial property, no liability of service tax will arise subject to verification by the jurisdictional authorities of the total amount of consideration received in this regard. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over payment of service tax for renting of immovable property for commercial and residential use.

Analysis:
The appeal was against the Order-in-Appeal regarding service tax payment for renting out premises for commercial and residential purposes. The department claimed the rent received by the appellant was liable for service tax under Renting of Immovable Property. The Commissioner (Appeals) upheld the demand as the appellant failed to provide evidence that the rented premises were not used for commercial purposes.

The appellant argued that part of the rent was for residential quarters and the rest for commercial use. They presented details of rent received and parties involved, mentioning specific exclusions under the service tax definition for residential use. The appellant also referred to a previous Tribunal decision remanding a similar dispute for further clarification.

The Department contended that the appellant did not provide sufficient proof that the premises were used for residential purposes. They suggested submitting registered lease agreements as evidence of usage.

After considering both sides and the definition of service tax for renting of immovable property, the Tribunal found that the rent received for residential purposes was not subject to service tax. They noted that the appellant had provided certificates from lessees confirming residential use, and no evidence showed mixed residential and commercial usage. The Tribunal emphasized the need for verification by jurisdictional authorities for commercial property rent to determine service tax liability.

Consequently, the impugned order was set aside, and the appeal was allowed, ruling in favor of the appellant.