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TMI Blog2024 (12) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the Service Tax on the total rent be collected from one of the co-owners.' In the present appeals, service tax cannot be recovered from the appellants in a combined fashion. If considered individually, the appellants are eligible for the benefit of exemption contained under N/N. 06/2005-S.T dated 01.03.2005. However, the appellants have undertaken that they will not ask for refund of the service tax deposited as they have recovered the same from their customer i.e. Axis Bank. As we hold that the appellants are not liable to pay service tax during the impugned period, penalties imposed are not sustainable and therefore set aside. Appeal allowed. - MR. S. S. GARG, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Ms. Kashish Sahni, Advocate for the Appellant Shri Yashpal Singh, Authorized Representative for the Respondent ORDER The appellants, Shri Ramesh Kumar Chaudhary, Shri Sanjay Chaudhary, Shri Vijay Chaudhary and Ms. Santosh Chaudhary, are landlords ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Counsel for the appellants makes an averment at the bar that the appellants would undertake that they would not claim any refund of the service tax paid by them after recovering the same from their customers. 4. Heard both sides and perused the records of the case. The issue of liability to service tax of individual owners of a property when the property is leased to others, has been decided by the Tribunal in a number of cases. We find that Tribunal Bench at Ahmedabad in the case of Sarojben Khushal Chand 2017 (4) GSTL 159 (Tri. Ahmd.) held that: 6 . We find that the limited question of law which needs to be addressed is : whether each of the co-owner, holding immovable property jointly, but receive the lease rent separately in proportion to the share in the property, is eligible to the benefit of threshold exemption limit as prescribed under Notification No. 6/2005-S.T., dt. 1-3-2005, as amended, separately. The relevant notification reads as follows :- Service Tax exemption when value of taxable service provided not exceeds Rs. 4 lakhs in a financial year In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this notification; (vi) the balance of Cenvat credit lying unutilised in the account of the taxable service provider after deducting the amount referred to in sub-paragraph (v), if any, shall not be utilised in terms of provision under sub-rule (4) of rule 3 of the said rules and shall lapse on the day such service provider starts availing the exemption under this notification; (vii) where a taxable service provider provides one or more taxable services from one or more premises, the exemption under this notification shall apply to the aggregate value of all such taxable services and from all such premises and not separately for each premises or each services; and (viii) the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed rupees four lakhs in the preceding financial year. 3. For the purposes of determining aggregate value not exceeding four lakh rupees, to avail exemption under this notification, in relation to taxable service provided by a goods transport agency, the payment received towards the gross amount charged by such goods transport agency under section 67 for which the person liable for paying Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of individual or association of persons in computing the gross taxable value under the exemption Notification No. 6/2005-S.T. The appellants on the other hand, vehemently argued that the definition of person provided under the General Clauses Act, is not relevant and inapplicable to the facts and circumstances of the present case, inasmuch as merely because several persons own the immovable property jointly, they cannot be treated as body of individuals or association of persons, when each co-owner receive the rent proportionate to their share in the immovable property, having separate PAN No. and subjected to TDS and income tax assessment separately. In support of their argument on the scope and meaning of association of persons they have referred to the judgment of Hon ble Supreme Court in the case of CIT v. Indira Balkrishna (supra) followed in Deghamwala Estates (supra) case where under similar circumstances, the co-owners who received the rent income proportionate to their share had been assessed to income tax separately, but not as an association of persons. 8 . Hon ble Supreme Court, while discussing the meaning of association of persons in their judgment in the case of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other groups of persons mentioned in the section. Into that controversy it is unnecessary to enter in the present case. Nor do we pause to consider the widely differing characteristics of the three other associations mentioned in the section, viz. Hindu undivided family, a company and a firm, and whether in view of the amendments made in 1939 the words in question can be read ejusdem generis with Hindu undivided family or company. It is enough for our purpose to refer to three decisions : In re B.N. Elia; Commissioner of Income-tax v. Laxmidas Devidas; and In re Dwarkanath Harischandra Pitale. In re B.N. Elias Derbyshire, C.J. rightly pointed out that the word associate means, according to the Oxford Dictionary, to join common purpose, or to join in action. Therefore, an association of persons must be one in which two or more persons join a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one of the object of which is to produce income, profits or gains. This was the view expressed by Beaumont, C.J., in Commissioner of Income-tax, v. Lakshmidas Devidas at page 589 and also in In re Dwarkanath Harischandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by individual co-owners; who joined together to form an association of persons . In the present case, the show cause notices were issued in many cases to one person among the Joint owners and in other cases to all the persons who had jointly owned the immovable property provided on rent. Needless to mention, the Service Tax Registration of individual assessees for collection of Service Tax is PAN based, hence, collection of Service Tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the Service Tax on the total rent be collected from one of the co-owners. Another argument of the Revenue is that since the property is indivisible and not earmarked against each of the co-owners, hence the Service Tax is leviable on the total rent received against the said property without apportioning against each of the co-owners in proportion to their share. We find fallacy in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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