2013 (12) TMI 493 - AT - Service Tax

Waiver of pre deposit - Penalties under Sec. 77 & 78 - Renting out of immovable property - Held that - benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said 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 - Stay granted.

Summary

Issues:
Service tax liability on individuals as providers of service under the category of renting out of immovable property.

Analysis:
The case involved a dispute regarding the service tax liability on individuals who were co-owners of a building and had rented out the premises. The appellants claimed that the amount received by them fell within the threshold limit of the Small Scale Industry (SSI) exemption as per relevant notifications. The Revenue, on the other hand, argued that since the property was jointly owned and rented out collectively, service tax liability should be assessed individually on each co-owner based on the total amount received.

Upon hearing both sides, the Tribunal considered the provisions of the SSI exemption Notification No. 6/2005-S.T. and its subsequent amendment. The Tribunal noted that the exemption granted under the notification was subject to the condition that the aggregate value of taxable services rendered by the assessee did not exceed the threshold limit of rupees ten lakhs in the preceding financial year. The Tribunal observed that if the rent cheques were received individually by each appellant as per the agreement, it indicated that they were renting out the property individually to a person. Therefore, when considering each appellant as a provider of the service, their aggregate value did not surpass the threshold limit.

Consequently, the Tribunal found that the appellants had made a prima facie case for the waiver of pre-deposit of the amounts involved. Therefore, the applications for waiver of pre-deposit were allowed, and the recoveries were stayed pending the disposal of appeals.