2018 (3) TMI 853 - AT - Service Tax

Renting of immovable property service - appellant collected rent on behalf of the Haryana State Agriculture Marketing Board and remitted it to the Board - Held that - Considering the fact that the appellant is not owner of the property in question and collecting the rent on behalf of the Board and remitting the same to the Board. The Board is also paying the service tax to the department - if service tax is demanded from the appellant, it would amount to double taxation - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax under the category of renting of immovable property service.
2. Whether the appellant, not being the owner of the property, is responsible for remitting rent to the Board and thus liable for service tax.

Analysis:
Issue 1: The main issue in this case is whether the appellant is liable to pay service tax under the category of renting of immovable property service. The appellant, an Agriculture Produce Market Committee, collected rent on behalf of the Haryana State Agriculture Marketing Board, the owner of the properties. The Revenue contended that since the appellant collected rent, they are liable to pay service tax. However, it was argued that the Board was already paying service tax on the rent collected by the appellant. The Tribunal considered this and held that demanding service tax from the appellant would result in double taxation. Therefore, the Tribunal concluded that the appellant, not being the owner of the property and remitting rent to the Board, is not liable to pay service tax.

Issue 2: Another crucial issue was whether the appellant, despite not being the owner of the property, was responsible for remitting rent to the Board and consequently liable for service tax. The Tribunal examined the fact that the appellant was collecting rent on behalf of the Board and remitting it to the Board, which was already paying service tax on the collected rent. The Tribunal emphasized that imposing service tax on the appellant in this scenario would lead to double taxation. Consequently, the Tribunal held that since the appellant was not the property owner and was merely facilitating the collection of rent for the Board, they are not liable to pay service tax. As a result, the impugned orders demanding service tax from the appellant were set aside, and the appeals were allowed.

In conclusion, the judgment by the Appellate Tribunal CESTAT Chandigarh, delivered by Mr. Ashok Jindal, Member (Judicial), determined that the appellant, an Agriculture Produce Market Committee, was not liable to pay service tax under the category of renting of immovable property service as they were not the property owner and were remitting rent to the Board, which was already paying service tax. The Tribunal ruled in favor of the appellant, setting aside the demands for service tax and allowing the appeals.