2024 (9) TMI 1596 - AT - Service Tax

Interpretation of N/N. 33/2012-ST for exemption of Service Tax on rent of immovable property - whether rent amount for the entire year is Rs. 6,57,000/- which is much below the threshold limit of Rs. 10,00,000/- per annum the same is exempted under N/N. 33/2012-ST dated 20.06.2012? - HELD THAT - In the present case the appellant are not output Service provider however, they have paid Service Tax on Reverse Charge basis in respect of certain service such as GTA, security Service, insurance service transportation of goods by road and security/detective agency service. This Service Tax was paid under Section 68 (2) of the Finance Act, 1994 read with Service Tax Rules, 1994 therefore the value of these services cannot be clubbed with the Service of renting of immovable property service. As regard the condition specified under proviso Clause (ii) of the notification the appellant have not availed any Cenvat Credit for providing service of renting of immovable property service. Even though they have taken the credit on the Service Tax paid on Reverse Charge basis that is not attributed to the provisions of service under renting. As per the plain reading of Clause (ii) Cenvat Credit is barred in order to avail to exemption notification only in respect of the output service on which the exemption notification is availed. In the present case there is no service on which the Cenvat Credit was availed in providing the renting of immovable property service therefore the condition mentioned at clause (ii) of the notification is not relevant. Therefore the total amount of rent that is Rs. 6,57,000/- being less than the threshold exemption limit of 10,00,000 / - P. A. is covered under exemption Notification No. 33 / 2012 - ST dated 20. 06. 2012. The demand is not sustainable - The impugned order is set aside - appeal is allowed.

Summary

Issues:
Interpretation of Notification No. 33/2012-ST for exemption of Service Tax on rent of immovable property.

Analysis:
The case involved a dispute regarding the liability to pay Service Tax on the rent of Rs. 6,57,000 received by the appellant for a specific period. The appellant contended that the rent amount falls below the threshold limit of Rs. 10,00,000 per annum and is exempted under Notification No. 33/2012-ST. The appellant argued that the adjudicating authority misinterpreted the terms of the Notification and wrongly denied the exemption. The appellant clarified that they are not providing any output service but are only receiving services on which they are paying Service Tax under Reverse Charge Mechanism, which should not disentitle them from the exemption under the said Notification.

The revenue, represented by the Superintendent AR, reiterated the findings of the impugned order, seeking to demand Service Tax on the rent received by the appellant. The Tribunal carefully considered the submissions from both sides and examined the records. The Tribunal noted that the revenue sought to demand Service Tax based on the rent received by the appellant. The denial of exemption was primarily due to the appellant paying Service Tax on certain services and availing Cenvat Credit. The Tribunal reproduced the relevant portion of Notification No. 33/2012-ST, which provides conditions for availing the exemption.

The Tribunal analyzed the provisions of the Notification in detail. It noted that the appellant had paid Service Tax under Reverse Charge Mechanism for certain services, which were not related to the renting of immovable property. The Tribunal emphasized that the condition regarding availing Cenvat Credit under the Notification is applicable only to the output service for which the exemption is claimed. Since the Cenvat Credit was not availed for the renting of immovable property service, the condition specified in the Notification did not apply in this case. Consequently, the Tribunal held that the total rent amount of Rs. 6,57,000, being below the exemption threshold, was covered under Notification No. 33/2012-ST, and the demand for Service Tax was deemed unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal's decision clarified the application of Notification No. 33/2012-ST in exempting Service Tax on the rent of immovable property, emphasizing the specific conditions and interpretations relevant to the case at hand.