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TMI Blog2019 (11) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... f business or commerce - For a tax to be levied under this heading, there must be a service provider and a service recipient and the service which is provided must be renting of immovable property and such renting must be for use in the course of furtherance of business or commerce. No service tax can be levied on renting of immovable property in the present case. Also, no evidence that there was any renting of the warehouses by the Appellant to MPWLC was for use in the course of or furtherance of business or commerce. Thus, there is no renting, no service provider and no service recipient in their arrangement and hence is not covered by the charging section. There is no hesitation in holding the impugned order unsustainable, with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid joint venture is a consideration for renting of immovable property service rendered to MPWLC. Accordingly, it was proposed to charge service tax on these amounts under Section 65(105)(zzzz) of Finance Act, 1994. The relevant Sections are as follows : 3. Renting of immovable property 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, for use in the course of or, for furtherance of, business or commerce, [Section 65(105((zzzz)]. Immovable property means (i) building and part of a building, and the land appurtenant thereto; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under Section 73 of the Finance Act, 1994. It was also proposed to recover interest under Section 75 of the Finance Act, 1994. Penalties were proposed to be imposed under Section 76 and 77 of the Finance Act, 1994 for contravention of provisions of Section 68 (failure to pay service tax) and Section 70 (failure to assess tax due on services) and provisions of Rule 4A (failure to issue an invoice) Rule 6 (failure to deposit service tax) and Rule 7 (failure to submit returns) of Service Tax Rules, 1994. After following due process, the Principal Commissioner of Customs, Central Excise and Service Tax, Bhopal by the impugned order dated 20.7.2016 confirmed the demands and interest and imposed penalties, as proposed. Aggrieved by this orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em because no service tax is payable at all at the first place. Similarly, since there are no violation of the law and hence no penalty is imposable. Further, even if it is held that the tax is payable, Section 80 of the Finance Act, 1994 provides that no penalty shall be imposed on the assessee for any failure due to reasonable causes. They are clearly covered by this provision of Section 80. 6. The learned Commissioner narrated the provisions of Section 65 (90a) of the Finance Act (renting of immovable property) and Section 65(105)(zzzz) of the Finance Act, 1994. After examining the agreement entered into between the Appellant and MPWLC and other documents, he observed that MPWLC had deduced the TDS under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. The Finance Act, 1994 does not provide for taxing the income of one partner in a joint venture deeming it to be rendition of service to the other. On this ground alone, this appeal may be allowed. 8. He further argues that renting of immovable property is taxable under Section 65(105)(zzzz) only when such renting is for use in the course of or furtherance of business or commerce. MPWLC is not an organisation engaged business or commerce but is only an organisation of the Government mandated to provide warehousing facilities for agriculture produce. 9. On the question of the Income Tax being deducted as TDS under Section 194(I) of the Income Tax Act by MPWLC before remitting their share of income to them, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be levied under this heading, there must be a service provider and a service recipient and the service which is provided must be renting of immovable property and such renting must be for use in the course of furtherance of business or commerce. A plain reading of the arrangement between the Appellant and MPWLC as narrated in the Show Cause Notice as well as in the impugned order clearly shows that it was a joint venture with an income sharing arrangement. In such a relationship there is neither a service provider nor a service recipient but only partners in business. For this reason alone, we find that no service tax can be levied on renting of immovable property in the present case. We also find no evidence that there was any renting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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