2021 (3) TMI 268 - AT - Service Tax

Renting of immovable property service - onetime non-refundable contribution made by the member units towards the expenditure of the park for developing and constructing the infrastructure - case of the department is that rental amount is collected in guise of non-refundable contribution which is nothing but service charge against renting of immovable property service hence, liable to service tax - HELD THAT - The Tribunal in the appellant s own case in the identical facts and circumstances and law point in M/S GUJARAT ECO TEXTILE PARK LTD. VERSUS C.C.E. S.T. SURAT-I 2019 (9) TMI 581 - CESTAT AHMEDABAD has held that the demand of service tax under the head of renting of immovable property service on the onetime contribution paid to the appellant by its members is not taxable. The entire case of the department is that one time refundable amount collected by the appellant from its member units is the service charge against the provision of Renting of Immovable Property Service but the department has not adduced a single evidence in support of its allegation. Hence, the contribution of the department in this regard has no legs to stand. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether non-refundable contributions made by member units towards the expenditure of a park for developing infrastructure are liable to service tax under "renting of immovable property service"?

Analysis:
The case involved the appellant, a Special Purpose Vehicle (SPV) formed for establishing textile parks under the scheme of integrated textile parks (SITP) by the Government of India. The Ministry of Textiles engaged IL & FS as a Project Management Consultant (PMC) for the scheme, overseeing park operations. The appellant received payments from member units, including price for equity shares, rent for land, non-refundable contributions, and usage charges. The Revenue sought service tax on non-refundable contributions under "renting of immovable property service."

The appellant argued similarity to a previous case decided by the Tribunal, asserting no change in circumstances. They contended that as an incorporated entity, no service existed between the SPV and its members, citing a Supreme Court judgment. The Revenue, represented by an Assistant Commissioner, relied on various judgments to support their position.

The Tribunal found the case identical to the previous one, where it ruled in favor of the appellant. It highlighted that the scheme predated the introduction of service tax on renting of immovable property, emphasizing the absence of evidence supporting the Revenue's claim. The Tribunal referenced the Supreme Court judgment to support the appellant's position and distinguished the Revenue's cited judgments.

Ultimately, the Tribunal held that the demand for service tax on non-refundable contributions was not sustainable, setting it aside and allowing the appeals with consequential relief. The judgment reiterated the non-taxable nature of the contributions based on the timing of the scheme's execution vis-a-vis the introduction of service tax on renting of immovable property.

This detailed analysis of the judgment showcases the intricate legal arguments, the application of relevant case law, and the Tribunal's reasoning in reaching its decision regarding the liability of non-refundable contributions to service tax under the category of "renting of immovable property service."