2017 (12) TMI 958 - AT - Service Tax

Renting of immovable property - Joint Venture (JV) agreement - sharing of revenue - Revenue entertained a view that the amount of consideration received by the appellant from warehousing corporation is liable to be taxed as the premises of the appellant were rented out to the warehousing corporation to be used for business or commerce - Held that - Considering the overall scope of the terms of the agreement, we find that the same is more in the nature of the Joint Venture Agreement than a simple rent agreement for usage of immovable property - reliance placed in the case of Mormugao Port Trust Versus Commissioner of Customs, Central Excise & Service Tax, Goa- (Vice-Versa) 2016 (11) TMI 520 - CESTAT MUMBAI , where similar issue was dealt and it was held that The money flow to the Assessee from SWPL, under the nomenclature of Royalty, is not a consideration for rendition of any services but infact represents the Appellant s share of revenue arising out of the Joint Venture being carried on by the Assessee and SWPL - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Appellant's liability to pay service tax under the category of "renting of immovable property."

Analysis:
1. The case involved a dispute regarding the appellant's liability to pay service tax under the category of "renting of immovable property." The appellant owned premises used for warehousing, and a joint venture agreement was entered into with a state government undertaking for storing goods.

2. The Original Authority held the appellants liable for service tax and imposed penalties under Sections 76, 77, and in one appeal, under Section 78 as well. The appellant contended that the agreement was a joint venture, not a simple rent agreement, and therefore, there was no service provider-service recipient relationship.

3. The appellant argued that specific clauses in the agreement indicated a joint venture with shared responsibilities and incomes, negating the renting of immovable property. They also highlighted that the TDS by the Warehousing Corporation under the Income Tax Act should not determine service tax liability.

4. The Revenue, represented by the AR, opposed the appellant's contentions, emphasizing that the essence of the agreement was the renting out of premises for warehousing purposes. They argued that TDS deductions indicated the nature of consideration recognized by the Income Tax Act.

5. The Tribunal analyzed the agreement and found it to be more in the nature of a joint venture agreement than a simple rent agreement. Citing relevant legal precedents, the Tribunal concluded that the impugned orders were not sustainable. The appeals were allowed, setting aside the previous decisions on the appellant's liability for service tax under the category of "renting of immovable property."

This detailed analysis of the judgment highlights the key arguments presented by both parties, the Tribunal's assessment of the agreement, and the legal basis for setting aside the previous decisions regarding the appellant's service tax liability.