2022 (12) TMI 95 - AT - Service Tax

Levy of service tax - renting of immovable property service or not - services by way of renting out its immovable property of shops and buildings to various persons/firms/organizations for use in the course of furtherance of business of commerce - HELD THAT - The issue as to whether the appellant would be liable for service tax under the category of renting of immovable property‟ for the period prior to 01.07.2012 and after 01.07.2012 has been settled by the Supreme Court in a recent decision rendered in the case of the appellant in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR 2022 (2) TMI 1113 - SUPREME COURT and it has been held that it would be taxable prior to 01.07.2012 but would not be taxable w.e.f. 01.07.2012. The dispute in the present case is from 01.04.2012 to 31.3.2013. In view of the aforesaid decision of the Supreme Court service tax under the category of renting of immovable property could have been confirmed only for the period from 01.04.2012 up to 30.06.2012. However, no service tax could have been confirmed for the period from 01.07.2012 to 31.03.2013. The order passed by the Commissioner is accordingly modified to the extent indicated above. Appeal allowed in part.

Summary

Issues:
Levy of service tax on renting of immovable property for the period 2011-2012.

Analysis:
The appeal challenges the order upholding the demand of service tax against the appellant for the period 2011-2012. The issue revolves around the levy of service tax amounting to Rs. 54,272 under the category of "renting of immovable property service" for the period from 01.04.2012 to 31.03.2013. The Department's case is based on the appellant renting out immovable property without paying service tax. The appellant failed to appear, while the Department's authorized representative presented submissions.

The Supreme Court's recent judgment in Krishi Upaj Mandi Samiti v/s Commissioner of Central Excise & Service Tax, Alwar clarified the taxability of renting immovable property. The Court held that such activity was taxable before 01.07.2012 but not taxable thereafter. The Court emphasized that the Market Committees' activities were not mandatory statutory duties, and any fees collected did not constitute statutory levies. The Court also discussed Rule 45 of the Rajasthan Agricultural Produce Markets Rules, 1963, highlighting that the fees collected were to be credited to the Market Committee Fund, not the Government Treasury.

Considering the Supreme Court's decision, service tax on renting immovable property could only be confirmed for the period from 01.04.2012 to 30.06.2012. No service tax was applicable for the period from 01.07.2012 to 31.03.2013. Therefore, the Commissioner's order was modified accordingly, allowing the appeal to that extent. The judgment clarifies the tax liability on renting immovable property and the applicability of service tax based on the Supreme Court's interpretation.

(Order dictated and pronounced in the open Court)