2024 (10) TMI 330 - AT - Service Tax

Levy of service tax - whether the activity of letting out shops/AARATHS and other premises for shops and canteen, banks, etc. is liable to service tax? - HELD THAT - The issue has been decided in Krishi Upaj Mandi Samiti, New Mandi Yard Vs. Commissioner of Central Excise and Service Tax, Alwar 2017 (5) TMI 1465 - CESTAT NEW DELHI The Tribunal referring to the Education Guide dated 20.06.2012 issued by the Board that any service provided by such bodies, which is not directly related to the agriculture and agricultural produce will be liable to tax e.g. renting of shops or other properties. On the main issue whether the appellant is liable to pay service tax stands decided and in that view, the appellant is liable to service tax for the normal period w.e.f. 1.10.2012 to 31.03.2014, which is the post-negative period, as the activities undertaken was for the furtherance of business or commerce which does not fall in the Negative List provided under Section 66D. The provisions of the N/N. 33/2012-ST dated 20.06.2012, under which the appellant is claiming exemption it is mandatory to follow the conditions for evaluating the threshold limit by arriving at the aggregate value of one or more taxable services provided by the service provider from one or more of the premises and not separately for each premises or each services. Further, Clause (viii) in clear terms sets out that the aggregate value of the taxable services rendered by the service provider from one or more premises shall not exceed Rs.10 lakhs in the preceding financial year. It is not permissible to pick and choose from the notification what is beneficial and discard what is against the party. The Notification has to be considered in entirety and the party claiming the benefit therein has also to satisfy the conditions enumerated therein. The Apex Court in Krishi Upaj Mandi Samiti 2022 (2) TMI 1113 - SUPREME COURT has observed that it is a settled law that the notification has to be read as a whole and if any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of the notification and exception or exempting provisions in the taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard. Further, it was observed that in a taxing statute, it is the plain language of the provisions that has to be preferred and where the language is plain and is capable of determining a defined meaning, strict interpretation is to be accorded. In the impugned order, the Commissioner (Appeals) arrived at a finding that the total receipts of the appellant during the subsequent financial years from 2009-10 to 2012-13 were above the threshold limit for the exemption and hence they are not eligible to SSI exemption benefit - there are no infirmity in the impugned order and the same is hereby affirmed. Appeal dismissed.

Summary

Issues:
1. Whether the activity of letting out shops and other premises for various purposes is liable to service tax.
2. Whether the appellant crossed the threshold limit for exemption under Notification No.6/2005-ST.
3. Whether the appellant is eligible for Small Scale Industry (SSI) exemption benefit under Notification No.33/2012-ST.

Analysis:
1. The appellant challenged an order confirming a service tax demand for letting out shops and premises. The issue was whether such activities are liable to service tax. The Tribunal referred to a previous decision and held that service tax is applicable for renting immovable property until 30-6-2012. However, post-negative list regime from 1-7-2012, service tax was not applicable for properties leased out for storage of agricultural produce. The Apex Court affirmed this view in a subsequent case. The appellant was held liable for service tax for the post-negative period as the activities were for business purposes not falling under the Negative List.

2. The issue of crossing the threshold limit for exemption under Notification No.6/2005-ST was raised. The Adjudicating Authority observed that the total rent receipts exceeded the threshold limit of Rs.10 lakhs in the financial years 2009-10 to 2013-14. The appellant was found ineligible for exemption benefit due to exceeding the threshold limit. The appellate order affirmed this decision based on documentary evidence and the provisions of the notification.

3. The appellant contended that the rent should have been bifurcated into exempted and taxable rents. However, the provisions of Notification No.33/2012-ST mandated evaluating the aggregate value of all taxable services provided, not separately for each service or premise. The condition was that the aggregate value of taxable services should not exceed Rs.10 lakhs in the preceding financial year. The appellate order upheld the decision that the appellant was not eligible for SSI exemption benefit as the total receipts exceeded the threshold limit. The order was affirmed based on strict interpretation of the notification and adherence to conditions for exemption.

In conclusion, the appeal was dismissed, affirming the liability of the appellant for service tax and denying the exemption benefits based on exceeding the threshold limit as per the relevant notifications.