2018 (2) TMI 840 - AT - Service Tax

Renting to Immovable Property Service - parking fees collected from various persons who used the premise of the appellant to park vehicles - Held that - The parking facility availed by various visitors to the mall is not in furtherance of any business or commerce as the other party is not involved in any such activity. However, the owners of the shop/ and their employees are availing the parking facility for which monthly consideration is collected by the appellant along with the rent payable for the said shops and premises - the consideration attributable to such income is liable to be taxed. CENVAT credit - banking and other financial services availed by the appellant during the course of raising finance for the construction of the mall which is further used by the appellant for business or commerce - Held that - we are in agreement to the appellant that the finance arrangement is attributable to the appellant s creation of the mall which are regularly used for providing taxable output service. Such finance is with reference to the business of the appellant and will be covered as input service - credit allowed. Appeal allowed in part.

Summary

Issues:
1. Liability of the appellant to pay Service Tax under Renting to Immovable Property Service for parking fees collected.
2. Eligibility of Cenvat Credit on banking and financial services for the construction of the mall.

Analysis:
Issue 1:
The dispute revolved around the appellant's liability to pay Service Tax under Renting to Immovable Property Service for parking fees collected from various individuals using the appellant's premise for parking. The lower Authority held the appellant liable for Service Tax on all parking fees, considering them under the taxable entry of renting immovable property service. The appellant's consultant argued that parking fees from mall visitors do not promote business or commerce and thus should not attract Service Tax. However, monthly parking charges from shop owners/employees renting space in the mall were not contested. The Tribunal noted that fees from individual visitors do not fall under the renting of immovable property service category as it requires the property to be used in the furtherance of business or commerce. On the other hand, fees collected from shop owners/employees for parking, along with rent, were deemed to be in furtherance of business or commerce, making them taxable.

Issue 2:
Regarding the eligibility of Cenvat Credit on banking and other financial services for constructing the mall, the Tribunal agreed with the appellant that such finance arrangements were attributable to the creation of the mall, which is used for providing taxable output services. The finance obtained was considered an input service related to the appellant's business activities. The Tribunal supported this stance by referencing various decisions, highlighting the connection between the finance raised and the taxable output services provided by the appellant. The Tribunal also considered the appellant's plea against penalties, acknowledging the complexity and litigation surrounding the tax entry for renting immovable property services. Given the circumstances and amendments in the tax entry, the Tribunal waived penalties imposed on the appellant, citing reasonable cause for non-payment of tax on a portion of parking fees.

In conclusion, the Tribunal upheld the Service Tax liability on parking facility provided to shop owners/employees but ruled out the liability on parking fees from visitors. The Cenvat Credit claimed by the appellant on banking and financial services was deemed eligible, and penalties were waived due to reasonable cause for non-payment of tax on certain parking fees.