2019 (4) TMI 1695 - AT - Service Tax

Renting of Immovable Property Service - appellant contested the said demand on the ground that they are not providing any renting services inasmuch as the ground rent as also the value of the property collected by them from M/s R.K. Investment Private Limited was transferred to the State Government through his treasury account not chargeable to tax as Union Government income by virtue of Article 289 of the Constitution of India - HELD THAT - Service tax being a central levy, requires all the assessees to be treated on the same platform. Though the appellant had taken a stand that this Bhoo Bhata collected by them is not retained by them and is further transferred to State Government but the adjudicating authority has observed that the appellant has not adduced any documentary evidence to support their above stand. As such, for verification of the said factual position, we are of the view that the matter needs to be remanded. Appeal allowed by way of remand.

Summary

Issues:
Interpretation of service tax liability on renting of immovable property by a government entity.

Analysis:
The judgment revolves around the service tax liability of a government entity, the M.P. Housing Board, for providing services related to the development and leasing of land. The case involved the appellant contesting a service tax demand of approximately ?3.84 crores imposed by the Revenue, arguing that the amounts collected were transferred to the State Government and not retained by them. The adjudicating authority reduced the tax demand to around ?2.33 crores but the Revenue appealed against this decision.

The appellant's primary contention was that the amounts collected were transferred to the State Government, making them not liable to tax as per Article 289 of the Constitution of India. They referenced a similar case involving M/s Bhopal Vikas Pradhikaran where the Commissioner had ruled that the lease rent collected was a government levy and not ordinary rental income, hence not taxable under the Finance Act. The appellant argued that they were acting on behalf of the State Government and the consideration received from the bidder should not be taxable.

The Tribunal noted the similarities between the present case and the decision regarding M/s Bhopal Vikas Pradhikaran, emphasizing the need for uniform treatment of all assessees under the central levy of service tax. However, the adjudicating authority observed a lack of documentary evidence supporting the appellant's claim that the amounts collected were transferred to the Consolidated Fund of the State. Consequently, the Tribunal decided to remand the matter for further verification, directing the appellant to produce relevant documents for reconsideration.

Regarding the Revenue's appeal, challenging the effective date of a provision related to service tax on vacant land, the Tribunal upheld the Commissioner's decision that the provision inserted from 1.7.2010 did not have retrospective effect. Citing a precedent decision by the Tribunal in the case of M/s CIDCO Ltd., the Tribunal rejected the Revenue's appeal, emphasizing consistency in interpreting the relevant provisions.

In conclusion, both appeals were disposed of with the Tribunal remanding the matter related to the appellant's tax liability for further examination and rejecting the Revenue's appeal concerning the effective date of the service tax provision on vacant land.