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2022 (3) TMI 8 - AT - Service TaxService tax liability for the period prior to 01.07.2010 - vacant land given on lease or licence for construction of a building or a temporary structure at a later stage to be used for furtherance of business or commerce - consideration received for leasing vacant land by the appellant to BJCL - relevant period is 1.06.2007 to 31.02.2012 - penalties under section 76, 77 and 78 for this period - HELD THAT - The Section 65 (105)(zzzz) was amended with effect from 01.07.2010 and vacant land given on lease or licence for construction of a building or a temporary structure at a later stage to be used for furtherance of business or commerce has been included in this definition and hence such leases became exigible to service tax under the category renting of immovable property service . It is undisputed that the appellant has leased about 35 acres of land to BJCL so that latter could set up cement plants and carry on business. Prior to 01.07.2010, such leases were not exigible to service tax. In NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX 2014 (1) TMI 1203 - CESTAT NEW DELHI , the question as to whether the service tax can be levied under this clause for the period prior to 01.07.2010 was examined and it was held in negative. The contract was for vacant land and not for a building or complex. Vacant land, even if it has some facilities incidental to the use of such land, was clearly excluded by sub-clause (c) to clause (iv) to the Explanation - it is found from the lease deed entered into by the appellant on 5th June, 2007 with BJCL and the supplementary lease deed entered into on 23rd November, 2007 that the lease was only for the land there was no lease of any building or structure as presumed by the Commissioner. The appellant is not liable to pay service tax prior to 01.07.2010 on the land leased to BJCL. The demand to this extent cannot be sustained and needs to be set aside along with interest and any penalty pertaining to such demand. So far as a period post 01.07.2010 is concerned, the appellant has already paid service tax and is only paying for waiver of penalty - Section 80 (2) of the Finance Act 1994 specifically provided for waiver of penalty under Section 76, 77 and 78 for failure to pay service tax payable as on 6th day of March, 2012 on taxable service referred to in sub-clause (zzzz) of clause 105 of Section 65 (i.e. renting of immovable property service) if the service tax was paid within six months from the date of presidential assent to the Finance Bill. This Bill was assented to by the President on 28.05.2012. The appellant has paid the service tax well before six months from this date. Therefore, in terms of 80(2) no penalty can be imposed upon on the appellant. All penalties, therefore, need to be set aside and are set aside. The case is found to be in favour of the appellant on merits, other submissions on extended period of limitation, cum tax benefit and revenue neutrality are not required to be examined - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Service tax liability on the lease of vacant land prior to 01.07.2010. 2. Penalty imposition under Section 76, 77, and 78 for the period post 01.07.2010. Issue-wise Detailed Analysis: 1. Service Tax Liability on Lease of Vacant Land Prior to 01.07.2010: The appellant, M/s Bhilai Steel Plant, leased 34.59 acres of land to M/s Bhilai JVC Cement Limited (BJCL) for setting up cement plants. The dispute centers on whether this lease was subject to service tax under the "Renting of Immovable Property Service" category for the period before 01.07.2010. The appellant argued that the lease of vacant land was not taxable as per the definition in Section 65 (105) (zzzz) of the Finance Act, 1994, before its amendment on 01.07.2010. The Tribunal referred to the decisions in New Okhla Industrial Development Authority vs. CCE & ST, Noida and Greater Noida Industrial Development Authority vs. CCE & ST, Noida, which held that renting of vacant land was outside the purview of taxable service prior to 01.07.2010. The Tribunal found the Commissioner's finding that the leased land had buildings on it to be factually incorrect. The lease agreements indicated that only vacant land was leased, and any buildings were separately licensed for office use, with service tax already paid on those buildings. Consequently, the Tribunal concluded that no service tax was payable on the lease of vacant land prior to 01.07.2010, and the demand for this period was set aside. 2. Penalty Imposition Under Section 76, 77, and 78 for the Period Post 01.07.2010: For the period after 01.07.2010, the appellant did not dispute the service tax liability and had already paid the due amount. However, the appellant contested the penalties imposed under Section 76, 77, and 78 of the Finance Act, 1994. The appellant argued that the conditions for imposing penalties, such as fraud or willful misstatement, were not met. Additionally, under Section 80(2) of the Finance Act, 1994, no penalty could be imposed if the service tax was paid within six months from the date of presidential assent to the Finance Bill, 2012. The Tribunal found that the appellant had paid the service tax within the stipulated period and, therefore, no penalties could be imposed. Consequently, all penalties for the period post 01.07.2010 were set aside. Conclusion: The Tribunal allowed the appeal, setting aside the service tax demand for the period prior to 01.07.2010 and the penalties for the period post 01.07.2010, providing consequential relief to the appellant.
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