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TMI Blog2017 (4) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... operate as a non-profit making organization. Section 6 of the Delhi Development Act specifies the objects of the appellant. The main objects are to promote and secure the development of Delhi according to plan and for that purpose, the appellant shall have the power to acquire, hold, manage and dispose of land and other property, to carry out building, engineering, mining and other operations, to execute works in connection with supply of water and electricity, disposal of sewage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto. 2. The appellants are registered with Service Tax Department under various categories of taxable services. In January 2008, the officers of Service Tax Commissionerate, Delhi conducted certain enquiry regarding service tax liability of the appellant. Upon enquiry, the Revenue felt that the appellants did not discharge proper service tax under the category of "renting of immovable property service", introduced as a taxable activity w.e.f. 01/06/2007. The Department conducted verification of records submitted by the appellant and gathered information base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant. Reference was made to Rule 42 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981. Since, 2003 the appellant is engaged in sale of lands on free hold basis. The conveyance deeds, copies of which were submitted, will show that the transaction is for conveyance of free hold ownership rights of the property. The President of India (therefore the appellant) is identified as vendor and the allottee of the land is identified a purchaser. The amount paid is termed as 'consideration' for conveyance/sales of the land. In such situation, there is no scope to tax such sale as renting of immovable property ; (b) the ground rent is a charge levied by the appellant as prescribed under Delhi Development Act, 1957. The appellant is discharging their statutory function under the Act and the levy is a statutory charge. The income is maintained under Nazul - II account for, or on behalf of the Central Government. It is in the form of land revenue and cannot be subjected to service tax liability. The levy of ground rent is not for use of the land. Even otherwise, the ground rent of non-commercial land cannot be subjected to service tax ; (c) lease of vaca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Standing Counsel appearing for Revenue defended the impugned order. First of all, he submitted that the appellants did not cooperate and submit the required documents and details of break-up figures, when called for by the Department. It resulted in the confirmation of full demand without considering the abatements or exemption, if any, applicable while arriving at the tax liability of the appellant. It is also submitted that the appellants have shown income under "sale of developed land", "sale of undeveloped land" and "ground rent". They have collected lease premium as well as ground rent while letting out the property in their control. The submissions of the appellant that the property was sold to the purchaser and there is no lease arrangement/agreement is not acceptable. The appellants did not substantiate their claim with documentary evidence. The term "leasing" has not been defined under the Finance Act, 1994. Reference can be made to Section 105 of Transfer of Property Act, 1882 which stipulates that the lease of immovable property is a transfer of right to enjoy such property made for a certain time. It was argued that lease of immovable property is only a transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of this sub-clause, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce; - Section 65 (105) (zzzz) Note : Section 65 (105) (zzzz) has been substituted by Finance Act 2010 with retrospective effect from 01.06.2007 vide Notification No. 24/2010-ST dated 22.06.2010. Prior to its substitution, it reads as under : Taxable service means any service provided or to be provided to any person, by any other person, in relation to renting of immovable property for use in the course of furtherance of business or commerce.] WITH EFFECT FROM 01.07.2010 TO 30.06.2012 Taxable service means any service provided or to be provided to any person, by any other person, by renting of immovable property or any other service in relation to such renting of immovable property, for use in the course or, for furtherance of, business or commerce.] Explanation 1. - For the purposes of this sub-clause, "immovable property" includes - (i) building and part of a building, and the land appurtenant thereto; (ii) l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude - (i) renting of immovable property by a religious body or to a religious body; or (ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre. Explanation 1. - For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings; Explanation 2. - For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;" 9. The first point, we notice is that renting of immovable property is a taxable activity if the said property is for use in the course or, for furtherance of, business or commerce. If the immovable property is let out for other than these purposes no tax liability will be attracted. We note that the appellants strongly pleaded that, out of the total receipt subjected to service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various amounts of tax liability by recording that the receipts under the heads "sale of developed land", "sale of undeveloped land" and "ground rent" are appropriately classified under taxable service of renting of immovable property and accordingly confirmed the demands. 11. Regarding the quantification of service tax liability, the Original Authority observed as below :- "I also observe that the department vide several letters as mentioned in the show cause notice had asked the DDA for submission of informations i.e. details of income under various heads for the period 16.06.2005 to 31.03.2010 but the relevant informations were not provided. They were also given ample opportunities during investigation for furnishing of segregated data from the consolidated figures of 'Sale of undeveloped Land' and 'Sale of developed land' (including leasehold and freehold basis) for the period under dispute but they filed to provide these bifurcated data to the department and only contested the levy. I further find that through instant show cause notice they were again given opportunity for submitting relevant data/ information to assess their service tax liability applying best judgment as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up income for taxable, commercial land ; (b) tax liability on vacant land prior to 01/07/2010. Statutory provision as applicable prior/post 01/07/2010 not analysed. [Here, reference can be made to the decision of Tribunal in Greater Noida Industrial Development Authority vs. CCE & ST, Noida reported in 2015 (38) S.T.R. 1062 (Tri. - Del.) as affirmed by Hon'ble Allahabad High Court 2015 (40) S.T.R. 95 (All.)]. ; (c) whether conveyance deeds executed by the appellant for transfer of land on 'free hold basis' without any provision for periodical lease rent can be considered as transaction in letting out. Copies of such conveyance deeds not examined for a finding. (d) service tax liability of various heads of income are taken together in summary manner. The observation of Original Authority at para 22.11 of the impugned order (reproduced earlier in this order) cannot justify a demand of huge amount of about Rs. 750 crores on the appellant ; (e) the application of provisions of Section 72 for arriving at the taxable value on 'best judgment' basis has not been justified. For following best judgment, the Original Authority simply stated "on the basis of material available on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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