2019 (12) TMI 120 - AT - Service Tax

Association of persons - clubbing of rent - benefit of the exemption extended to small service providers by Notification dated 1 March, 2005 and 20 June, 2012 - HELD THAT - The Division Bench in the decided four Appeals relied upon a decision rendered by the Chandigarh Bench of the Tribunal in Anil Saini Vs. CCE, Chandigarh I 2017 (1) TMI 101 - CESTAT CHANDIGARH holding that the benefit of the exemption notification would be available to individual owners of the property and clubbing of rent of all the four individual co- owners of the property was not legally sustainable. The impugned order passed by the Commissioner (Appeals) clubbing the rent of all the four Appellants was not justified. If that be so, each of the individual owners would be entitled to the benefit of exemption notification - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Challenge to order upholding Joint Commissioner's decision on service tax liability calculation for co-owners of a property.
- Interpretation of exemption notifications for small service providers.
- Clubbing of rent for service tax calculation.

Analysis:
1. The Appeals were filed to challenge a common order dated 11 May, 2016, which upheld the Joint Commissioner's decision regarding the service tax liability calculation for the co-owners of a property named NCR Plaza. The Appellants contested that the Department wrongly clubbed the rent received by all co-owners, exceeding the exemption limit provided in specific notifications.

2. The dispute arose from a Show Cause Notice issued to the Appellants, calculating the service tax liability based on the rent received collectively by the co-owners from M/s ICICI Bank Ltd. The Appellants argued that they should individually benefit from the exemption for small service providers as the rent was separately received by each co-owner.

3. The Appellants relied on a previous decision in their favor for the period from June 2007 to June 2012, where it was established that individual owners of the property are entitled to the exemption notification benefits. The Department's representative acknowledged the similarity of the issue in the current Appeals to the previously decided ones.

4. The Division Bench referred to a precedent from the Chandigarh Bench, emphasizing that the exemption notification should apply to individual property owners, and combining the rent of all co-owners for tax calculation was legally unsustainable. Consequently, the impugned order of clubbing rent was deemed unjustified, and each individual owner was granted the benefit of the exemption notification.

5. Based on the precedent and the legal position established, the impugned order was set aside, and the Appeals were allowed in favor of the Appellants. The decision highlighted the importance of recognizing individual ownership rights in determining service tax liability, especially in cases involving co-owners of a property.