2023 (8) TMI 540 - AT - Service Tax

Refund of the Service Tax - parking charges - excluded from the definition of immovable property for the purposes of service under RIPS or not - HELD THAT - The inclusive part of the definition of immovable property covers inter alia building and part of a building and the land appurtenant thereto and also land incidental to the use of such building or part of a building. Clause (iv) of Explanation 1 excludes, inter alia, land used for educational, sports, circus, entertainment and parking purposes. The legislature has used the words land and vacant land in accordance with the context, wherever applicable. When land in a legal sense includes structures, if any, raised thereon, the same covers the land appurtenant to a building or a part of the building as well. From a reading of the provisions, it is seen that, for the purposes of sub-clause (zzzz) of Section 65 (105), immovable property does not include land used for parking purposes - While clauses (a) and (b) under Explanation 1 make a reference to vacant land , clause (c) refers only to land . The purpose for the use of land is also mentioned as educational, sports, circus, entertainment and parking. Therefore, the word parking takes colour from the preceding words educational, sports, circus, entertainment. These activities in the normal course are of a nature that would normally be carried out in buildings to be put up either as a temporary or a permanent structure on land. It is perhaps for this reason that exclusion clause (c) uses the term land instead of the term vacant land as used in exclusion clauses (a) and (b). Thus, a building or its part put up on land and which is used for car parking will get the benefit of the exclusion from levy of Service Tax under Section 65(105)(zzzz) ibid., as it stood then - the rejection of the refund claim is held to be not in order - the impugned order is set aside and the appeal is allowed.

Summary

Issues:
The issues to be decided in this case are:
1. Whether the parking facility provided by the appellant in the "land" is covered under the definition of RIPS within the meaning of Section 65(105)(zzzz) of the Finance Act, 1994?
2. Whether the rejection of refund is in order?

Issue 1:
The appellant sought a refund of Service Tax paid on parking services provided by them, claiming that the parking charges were exempted as the land used for parking was excluded from the definition of immovable property under Section 65(105)(zzzz). The Revenue doubted whether the parking space provided could be considered as "land" or an integral part of the building. A Show Cause Notice was issued proposing to reject the refund claim. The appellant argued that the parking space provided was "land" and not "building," and therefore, exempt from Service Tax under the relevant definition.

Issue 2:
The adjudicating authority rejected the refund claim, holding that the definition of immovable property included the parking area. The appellant appealed this decision, but the first appellate authority also rejected their appeal. The appellant contended that the parking charges were exempted from Service Tax as they were collected for parking on land used solely for parking purposes, which falls under the exclusion clause (c) of the definition of immovable property. The appellant emphasized that the parking charges did not include any element of tax, and the tax incidence was not passed on to customers.

The Tribunal analyzed the relevant provisions of Section 65(105)(zzzz) of the Finance Act, 1994, which defines taxable services related to renting of immovable property. The inclusive part of the definition of immovable property covers building, land appurtenant thereto, and land incidental to the use of a building. The exclusion clause (c) specifically mentions "land used for educational, sports, circus, entertainment, and parking purposes," indicating that such land is not considered immovable property for taxation purposes.

The Tribunal observed that the legislature used the terms "land" and "vacant land" in the definition according to the context. The appellant's argument that the parking space falls under the exclusion clause (c) as land used for parking purposes was supported. The Tribunal held that the parking facility provided by the appellant on land used solely for parking purposes is excluded from the levy of Service Tax under Section 65(105)(zzzz). Therefore, the rejection of the refund claim was deemed inappropriate.

In conclusion, the impugned order was set aside, and the appeal was allowed, provided that the duty had not been passed on, with any consequential benefits as per law.