2023 (6) TMI 846 - AT - Service Tax

Levy of Service Tax - Renting of Immovable Property Service - rental income received by the appellant from the property - HELD THAT - In the case of the co-owner Smt. Akila, the Tribunal has set aside the demand observing that income received as rent separately by each co-owner is much below the threshold limit to subject to levy of service tax. Thus, the income falls within the threshold limit for payment of service tax. Vide A. AKILA VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY COMMISSIONERATE TRICHY 2018 (10) TMI 559 - CESTAT CHENNAI the Tribunal has relied upon the decision of ANIL SAINI, KABAL SINGH, NEELAM SAINI, SURINDER KAUR, JASWINDER SINGH, PARMOD KUMAR CHAUDHARY, SUKHJEET JODHA VERSUS CCE, CHANDIGARH-I 2017 (1) TMI 101 - CESTAT CHANDIGARH where it was held that The service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. The demand do not sustain - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the liability of service tax on rental income received by co-owners jointly, the applicability of the threshold limit for payment of service tax, and the interpretation of relevant case laws in determining the tax liability.

Liability of Service Tax on Rental Income:
The appellant was under scrutiny for providing services under 'Renting of Immovable Property Service' without paying the appropriate service tax. The department alleged that the rental income from a commercial complex jointly owned by the appellant and another individual should be considered for service tax. However, the Tribunal noted that the income received separately by each co-owner was below the threshold limit for service tax liability. Citing precedents such as Anil Saini Vs CCE Chandigarh and S.V. Janardhanam Vs CGST & CE Salem, the Tribunal held that the demand for service tax could not be sustained in this case. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.

Applicability of Threshold Limit for Service Tax:
The Tribunal emphasized that the rental income received separately by co-owners must be within the threshold limit to be subject to the levy of service tax. By referring to the Final Order in the case of the co-owner Smt. Akila, where the demand was set aside due to income falling below the threshold limit, the Tribunal applied the same reasoning in the present case. The decision was based on the principle that income below the threshold limit is not required to pay service tax, as established in relevant case laws.

Interpretation of Case Laws:
In reaching its decision, the Tribunal relied on the Final Order in the case of Anil Saini Vs CCE Chandigarh and S.V. Janardhanam Vs CGST & CE Salem to support the conclusion that income falling within the threshold limit is not liable for service tax. By aligning with the precedent set in these cases, the Tribunal determined that the demand for service tax on the rental income of the appellant and the co-owner could not be upheld. As a result, the impugned order was set aside, and the appeal was allowed with any consequential relief that may arise.