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2023 (12) TMI 678 - AT - Service TaxClassification of service - renting of immovable property service or construction service? - sub-leasing the industrial lands allotted by Maharashtra Industrial Development Corporation (MIDC) to various customers - HELD THAT - Under the provisions of Section 66E ibid, the service under the category of renting of immovable property has been considered as a declared service. Thus, any amount received towards rent for letting out the property will only be liable for payment of service tax and not otherwise. As per the contractual norms, the rent amount has been fixed, which the appellant is entitled to receive from the lessee for letting out the property, which had not been disputed by the department in the present case. One time premium received by the appellant cannot be equated with rent inasmuch as the said amount is payable by the lessee for obtaining lease of the immovable property and for various infrastructural facilities provided in that property. In other words, since such premium amount is not in the context with the occupation of the immovable property leased, the same shall not be treated as a consideration , for letting out the property. The issue arising out of the present dispute is no more res integra, in view of the order passed by this Tribunal, in the case of M/S. GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS CCE ST, NOIDA 2014 (9) TMI 306 - CESTAT NEW DELHI where it was held that Service Tax under Section 65(105)(zzzz) read with Section 65(90a) cannot be charged on the premium or salami paid by the lessee to the lessor for transfer of interest in the property from the lessor to the lessee as this amount is not for continued enjoyment of the property leased. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellant. Therefore, by setting aside the impugned order, the appeal is allowed in favour of the appellant.
Issues: Classification of service under the category of 'renting of immovable property' for sub-leasing industrial lands and taxation liability under the Finance Act, 1994.
Summary: Issue 1: Classification of Service The appellant sub-leased industrial lands and received a premium, contending it is not rent but more akin to 'Salami'. The Department argued the premium should be considered as rent under 'renting of immovable property'. Relying on precedents, the appellant argued the issue is settled. The Tribunal examined the agreement and noted the premium was separate from the fixed rent, not for occupation of the property, thus not taxable as rent. Issue 2: Taxation Liability The appellant was engaged in developing an Integrated Textile Park under a government scheme. The Department considered the premium as consideration for 'renting of immovable property' under Section 66E of the Finance Act, 1994. The Tribunal referred to a previous order distinguishing between premium and rent, stating Service Tax is leviable only on rent for continuous enjoyment, not on premium for transfer of interest in the property. As the premium was not for continued enjoyment, the Tribunal found no merit in the Department's demand, allowing the appeal in favor of the appellant. Separate Judgment: No separate judgment was delivered by the judges in this case.
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