2019 (6) TMI 1069 - AT - Service Tax

Renting of immovable property Service - vacant land given on rent to the lessee on which the Hutch Company has erected and installed transmission tower for mobile telephone - HELD THAT - While renting of immovable property by the appellant to M/s Hutch Company, it is admittedly a vacant land on which Hutch Company has installed a transmission tower for mobile telephone on their own, therefore, the installation of transmission tower cannot be attributed to the appellant. The appellant s activity is confined to providing the vacant land to M/s Hutch Company, therefore, it is clear that the appellant has rented out only vacant land. With this amendment, it is clear that prior to 01.07.2010, the vacant land given on lease subsequently any construction on such land at a later stage was not covered under immovable property. Accordingly, the activity of the appellant was not taxable prior to 01.07.2010, therefore, the demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether vacant land given on rent, where a transmission tower is installed by the lessee, is liable to service tax under renting of immovable property.

Analysis:
The issue in this case revolves around determining the liability of service tax on vacant land rented out to a lessee who installs a transmission tower. The appellant argued that vacant land does not fall under the definition of immovable property for service tax purposes. The appellant contended that the installation of the transmission tower by the lessee does not change the status of the land. The appellant highlighted that the amendment to the definition of immovable property only brought such situations under the service tax net from 01.07.2010 onwards, making the demand prior to this date unsustainable.

The Revenue, represented by the Assistant Commissioner, supported the findings of the impugned order, emphasizing the tax liability on the rented vacant land with a transmission tower installed by the lessee. However, the Tribunal examined the submissions from both sides and reviewed the records. The Tribunal observed that the appellant merely rented out vacant land to the lessee, who independently installed the transmission tower. It was clarified that any structure built on the vacant land would be considered immovable property only from 01.07.2010 onwards due to the amendment. Therefore, the Tribunal concluded that prior to this amendment, the activity of renting out vacant land with subsequent construction was not taxable. Consequently, the demand for service tax was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.

This judgment clarifies the taxability of vacant land rented out to a lessee who erects structures like transmission towers. It underscores the significance of the date of the amendment in determining the tax liability concerning immovable property. The decision provides a clear interpretation of the law regarding service tax on renting of immovable property, particularly in cases involving subsequent construction on leased vacant land.