2013 (1) TMI 578 - AT - Service Tax

Waiver of pre-deposit - Stay Petition - Penalties u/s 77 - Renting out of immovable property - Co-owner of a property - Tenant issues different cheques to all the individuals as they are co-owners - Availing SSI exemption - Notification No. 08/2008-ST dated 01.03.2008 - Held that - Notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. Waive pre-deposit and Stay granted

Summary

Issues:
1. Waiver of pre-deposit of service tax liability, interest, and penalties under Sections 77 & 78 of Finance Act, 1994.

Analysis:
The judgment before the Appellate Tribunal CESTAT AHMEDABAD involved applications seeking waiver of pre-deposit of a Service tax liability amounting to Rs.73,841, along with interest and penalties under Sections 77 & 78 of the Finance Act, 1994. The primary issue in this case revolved around the service tax liability concerning the individuals involved, who were categorized as providers of service under the renting out of immovable property.

The appellant, represented by a Chartered Accountant, argued that the individuals were co-owners of a building and had collectively rented out the premises to a tenant who issued separate cheques to each co-owner. The appellant contended that the amounts received individually by each co-owner fell within the threshold limit of the Small Scale Industries (SSI) exemption as per Notification No. 6/2005-ST dated 1.3.2005, subsequently amended by Notification No. 08/2008-ST dated 01.03.2008. On the other hand, the Departmental Representative argued that since the property was jointly owned and collectively rented out, the service of renting out an immovable property was applicable, justifying the individual assessment of service tax liability on each co-owner based on the collective amounts received.

Upon reviewing the submissions from both parties, the Tribunal analyzed the SSI exemption provided under Notification No. 6/2005-ST and its amendment under Notification No. 08/2008-ST. The Tribunal noted that the exemption granted under these notifications was subject to the condition that the aggregate value of taxable services rendered did not exceed the threshold limit of ten lakhs rupees in the preceding financial year. The Tribunal observed that if the cheques for rent were received individually by each appellant as indicated in the rental agreement, and if each appellant was considered a provider of the service individually, the aggregate value did not surpass the threshold limit. Consequently, the Tribunal found that the appellants had established a prima facie case for the waiver of pre-deposit amounts.

In light of the above analysis, the Tribunal allowed the applications for the waiver of pre-deposit amounts and stayed the recoveries until the appeals were disposed of. The judgment was pronounced in court by the members of the Tribunal, M.V. Ravindran and B.S.V. Murthy.