2017 (9) TMI 790 - AT - Service Tax

Renting of immovable property service - levy of service tax - Held that - the case has been made out that sopo charges are not in respect of any fixed place/ spaces or shops in the market but the same are collected for open spaces allotted to contractors for further sale to vendors etc. - The impugned order does not deal with the issue involved in the instant case as the same were not properly communicated - matter remanded to the original adjudicating authority for deciding the issue afresh after getting a clear understanding of the nature of all the charges collected by the appellant - appeal allowed by way of remand.

Summary

Issues:
- Challenge of demand on rent of immovable property service
- Applicability of service tax on vacant land
- Constitutional responsibility of municipal corporation in market development
- Invocation of extended period of demand
- Clarification on purpose of Sopo charges
- Verification of segregation of charges

Analysis:
1. Challenge of Demand on Rent of Immovable Property Service:
The appeal was filed against the confirmation of demand on rent of immovable property service. The appellant argued that the demand for service tax from June 2007 to March 2012 was raised for the recovery of rent from shop/commercial premises. The appellant contended that service tax on immovable property service cannot be collected for vacant land, citing relevant legal precedents.

2. Applicability of Service Tax on Vacant Land:
The appellant argued that the demand of Sopo charges, collected in respect of vacant land, was not justifiable under the service tax on immovable property service. Reference was made to a specific case law to support this argument, highlighting the distinction between different types of properties for tax purposes.

3. Constitutional Responsibility of Municipal Corporation in Market Development:
The appellant contended that the construction of markets is a constitutional responsibility of the municipal corporation, as per Article 243(W) of the Constitution and relevant municipal laws. It was argued that this constitutional duty exempts them from the imposition of service tax, as supported by a circular issued by the Central Board of Excise and Customs.

4. Invocation of Extended Period of Demand:
The appellants challenged the invocation of the extended period for demand. However, the specific grounds for contesting this extension were not explicitly mentioned in the summary of the judgment.

5. Clarification on Purpose of Sopo Charges:
The adjudicating authority noted a lack of clarity regarding the purpose of collecting Sopo charges. The authority observed confusion among the appellant's representatives regarding the nature of these charges and the distinction between tax and fee. The judgment highlighted the need for a clear understanding of the exact purpose of collecting Sopo charges.

6. Verification of Segregation of Charges:
The appellants indicated a segregation of Sopo charges from rental income received for shops. The judgment emphasized the importance of verifying this segregation and understanding the nature of all charges collected by the appellant. The case was remanded to the original adjudicating authority for a fresh decision after obtaining a clear understanding of the charges involved.

In conclusion, the appellate tribunal allowed the appeal by way of remand, underscoring the necessity for a detailed examination of the issues raised, including the purpose of Sopo charges and the segregation of different types of charges collected by the appellant.