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TMI Blog2018 (7) TMI 1797X X X X Extracts X X X X X X X X Extracts X X X X ..... houses. Each house shares a wall with the houses on either side and perhaps with the one in front / behind. For the activity to be covered by the definition of residential complex, it should comprise of more than twelve residential units. These should be situated within one building or more than one building. Further, the requirement is that these residential units should have common area and also water supply/ affluent treatment system and other common facilities such as park, lift, common parking space etc. All these facilities should be located within a premises and the layout of such premises should be approved by an authority under any law for the time being in force - From the findings recorded by the Adjudicating Authority, it does not appear that he has examined the situation in terms of satisfying the condition specified in the definition in respect of each and every cluster of houses constructed by RHB and for which demand of service tax has been made - the matter remanded to the Adjudicating Authority for re-examination and denovo decision. Renting of Immovable Property - The RHB has constructed various commercial buildings/ shops which have been allotted on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds cost of land, cost of construction, periodic lease money (payable on yearly basis), one time lease money and other charges related to registration etc. The Department formed the opinion that the appellant has engaged in construction of residential units which are covered by the definition of Residential Complex Service under Section 65(91a) read with Section 65(30a) of the Finance Act, 1994 and the appellant was liable for payment of service tax on the consideration so received. 3. In addition to construction and allotment of residential units, appellant also constructed shops which were leased to successful bidders in the auction process. Such lease was for a period of 99 years and various amounts were recovered. The Department was of the view that the amounts recovered as lease charges were liable to payment of service tax under the category of "Renting of Immovable Property Service" falling under Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994. Show cause notice was issued and the issue was finalised with the issue of impugned order in which the adjudicating authority ordered payment of service tax both under 'Construction Service' as well as "Rentin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotted, lease amounts have been charged and collected and department has levied service tax on such lease amount also. As per the definition of "Renting of Immovable Property Service", service tax is not liable to be paid in respect of residential properties. (iv) In respect of service tax demands raised under both the above heads, ld. Counsel also submitted that the demand is hit by time bar. It is submitted that RHB is an instrumentality of the State Government and as such it cannot be said that RHB has indulged in suppression of facts to evade service tax. 6. Ld. AR justified the impugned order. In respect of construction of complex service, he brought to our notice the findings of the lower authority in para 15 of the impugned order. He submitted that the lower authority has recorded that RHB constructed houses in a large common area having common approach road, water supply, park and many other common facilities. Hence, he submitted that the residential scheme developed by RHB satisfies all the criteria of residential complex. 7. Heard both sides and perused appeal record. 8. First we consider the demand of service tax raised under the category of "Construction of Complex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial unit" means a single house or a single apartment intended for use as a place of residence; "Taxable Service" as per section 65(105)(zzzh) of the Finance Act, 1994 : "Taxable Service" means any service provided or to be provided to any person, by any other person, in relation to construction of complex Explanation. - For the purposes of this sub-clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer. 9. For the activity to be covered by the definition of residential complex, it should comprise of more than twelve residential units. These should be situated within one building or more than one building. Further, the requirement is that these residential units should have common area and also water supply/ affluent treatme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 years Perpetual Lease. From such allottees, various amounts were recovered by RHB as lease charges. The charges are partly payable in lumpsum at the time of allotment and partly as recurring charges on annual basis. The lower authority has held that RHB will be liable to payment of service tax under this category on the entire amount received. This has been strongly resisted by the appellant with the submission that 99 years lease takes the character of sale, particularly in view of the fact that the allottee is free to sell or gift or mortgage the building. Further, it has been submitted that the lease amounts have been paid by RHB to Rajasthan Government and no part of the same is retained by them. 12. The relevant definition is reproduced below for ready reference: "Section 65(90a) of Finance Act, 1994 "(90a) "renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include - (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the definition of "Renting of Immovable Property" has been examined in very great detail by the Tribunal in the case of Greater Noida Industrial Development Authority vs. CCE&ST, Noida - 2015 (38) STR 1062 (Tri. Del.). The finding of the Tribunal is reproduced below: "9.2 The other plea of the appellant that the allotment of land by the appellant to various persons is on long term lease basis - the leases of 90 years, which amount to transfer of ownership and such leases are outside the purview of Section 65(105)(zzzz) and in this regard, the appellant have relied upon the judgments of the Apex Court in the case of Shanti Sharma & Ors. v. Ved Prabha & Ors. reported in (1987) 4 SCC 193 and also the judgment in the case of R.K. Polshikar (HUF) v. CIT reported in (1988) 3 SCC 594. 9.2.1 While Section 65(105)(zzzz) provides that service provided to any person by any other person by renting of immovable property or any other service in relation to such renting in course of or for furtherance of business or commerce is taxable, Explanation 1 mentions as to which immovable properties are included in expression "immovable property" and which immovable properties are not included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant's contention that long term leases or lease in perpetuity are excluded from the purview of Section 65(105)(zzzz) read with Section 65(90a). 9.2.3 The appellant have cited the judgment of the Apex Court in the case of Shanti Sharma v. Ved Prabha (supra). This judgment is with regard to the provisions of Section 14(1)(e) of the Delhi Rent Control Act, 1958. Section 14(1) of the Delhi Rent Control Act provides that Rent Controller may, on an application made by the landlord in the prescribed manner, order for the recovery of the possession of the premises on the ground as mentioned in Clause (a) to (e). The ground mentioned in clause (e) is that the premises let for residential purposes are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation. In this case, the house let out by the respondent, Ms. Ved Prabha was built on a leasehold land allotted to her by DDA and it was the plea of the petitioner Ms. Shanti Sharma that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question, he has parted with an asset of enduring nature, viz. the right to possession and enjoyment of the property leased for a period of 99 years subject to certain conditions on which the leases could be terminated and that provisions of Section 12B of the Income Tax Act would be applicable to the income from such leases. Thus, this judgment of the Apex Court is also with regard to the provisions of Section 12B of the Income Tax Act and the ratio of this judgment is that income from transfer of a plot of land on long term basis is to be treated as capital gain income which would be taxable under Section 12B of the Income Tax Act. This judgment is not an authority for the appellant's proposition that all long terms lease of land amount to transfer of ownership of land. 9.2.5 We, therefore, hold that all the leases of immovable property as defined in Section 65(105)(zzzz) would be covered for Service Tax whether the lease is short term or long term or lease perpetuity." 14. The above decision of the Tribunal was affirmed by the Hon'ble Allahabad High Court, reported as 2015 (40) STR 95 (All.). In the above case, the Tribunal has examined the leviability of service tax on long ..... X X X X Extracts X X X X X X X X Extracts X X X X
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