2018 (10) TMI 560 - AT - Service Tax

Renting of immovable property service - co-owners of inherited property - threshold exemption to each co-owners separately - Held that - The Tribunal in the case of Sarojben Khulsanchand & Ors. Vs. Commissioner of Service Tax, Ahmedabad 2017 (5) TMI 240 - CESTAT AHMEDABAD , had considered the similar issue and held that The service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax on total rents received by joint owners of a commercial complex.

Analysis:
The dispute in this case revolves around the demand of service tax on the total rents received by four joint owners of a commercial complex rented to various persons. The original authority demanded a service tax amount from all joint owners under the category of renting of immovable property for a specific period, along with penalties imposed under relevant sections of the Finance Act, 1994. The Commissioner (Appeals) upheld the original order, leading to appeals filed by three of the joint owners.

The appellant's representative argued that the matter has been settled by various Tribunal decisions and cited specific case laws to support their stance. On the other hand, the respondent supported the impugned order. After considering the arguments from both sides and reviewing the facts, it was acknowledged that the matter had been settled by previous Tribunal decisions. The Tribunal referred to a specific case where the issue of joint ownership and service tax liability was discussed in detail. The Tribunal highlighted the importance of individual ownership rights, separate PAN numbers, and income tax assessments for each co-owner in determining service tax liability.

The Tribunal emphasized that the concept of "association of persons" should not be applied in a situation where co-owners receive rent proportionate to their share in the property. It was noted that service tax should be charged based on the service provided, regardless of physical demarcation of the property among co-owners. The Tribunal cited previous cases where similar issues were addressed, and the benefit of exemption was granted to individual co-owners based on their share in the property. Following established precedents and legal principles, the Tribunal set aside the impugned order and allowed the appeals with consequential benefits, if any, as per law.

In conclusion, the judgment clarifies the application of service tax on rents received by joint owners of a property and emphasizes the individual rights and obligations of co-owners in such scenarios. The decision is based on established legal principles and precedents set by previous Tribunal cases, ensuring a fair and consistent interpretation of the law in similar situations.