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TMI Blog2024 (7) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... aid order-in-original, the appeal filed before Commissioner (Appeals) came to be rejected therefore, the present appeal filed by both the co-owners of the property leased out to Punjab National Bank. 2. Shri D.K. Trivedi, learned counsel appearing on behalf of the appellant at the outset submits that the amount of rent received individually for one financial year is much below the threshold limit of exemption as per Notification No. 6/2005-ST dated 01.03.2005 as amended vide Notification No. 8/2008-ST dated 01.03.2008. It is his submission that each individual out of both the co-owners has to be considered as individual service provider and therefore, their portion of rent received being within the threshold limit of exemption, service tax liability is not sustainable. He placed reliance on the following judgments:- (a) Sarojben Khushalchand versus Commissioner of Service Tax, Ahmedabad - 2017(4) GSTL 159 (Tri.-Ahmd) (b) CCE, Nasik versus Deoram Vishrambhai Patel - 2015(40) STR 1146 (Tri.-Mum.) (c) Anil Saini & Ors. versus CCE, Chandigarh-I- 2017(51) STR 38 (Chandigarh) (d) CCE, Allahabad versus Laxmi Chaurasia - 2017(49) STR 541 (Tri.- All.) 3. Shri AR Kanani, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall apply subject to the following conditions, namely :- (i) the provider of taxable service has the option not to avail the exemption contained in this notification and pay Service Tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year; (ii) the provider of taxable service shall not avail the Cenvat credit of Service Tax paid on any input services, under rule 3 or rule 13 of the Cenvat Credit Rules, 2004 (hereinafter referred to as the said rules), used for providing the said taxable service, for which exemption from payment of Service Tax under this notification is availed of; (iii) the provider of taxable service shall not avail the Cenvat credit under rule 3 of the said rules, on capital goods received in the premises of provider of such taxable service during the period in which the service provider avails exemption from payment of Service Tax under this notification; (iv) the provider of taxable service shall avail the Cenvat credit only on such inputs or input services received, on or after the date on which the service provider starts paying Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utive payments received during a financial year towards the gross amount, as prescribed under section 67 of the said Finance Act, charged by the service provider towards taxable services till the aggregate amount of such payments is equal to four lakh rupees but does not include payments received towards such gross amount which are exempt from whole of Service Tax leviable thereon under section 66 of the said Finance Act under any other notification. This notification shall come into force on 4. the 1st day of April, 2005." 7. The basis of allegation by the Revenue against the Appellants rests on the premise that even though the immovable property is jointly owned by several persons, since the property itself is indivisible, and each person cannot separately render the service without involvement of other co-owners, hence the total rent received as a whole, be considered for the purpose of computing aggregate value of taxable services in extending the Notification No. 6/2005-S.T., dated 1-3-2005, as amended. In other words, the Service Tax is assessed on the total amount of rent, without extending the benefit of exemption Notification No. 6/2005-S.T. on the rent recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Act of 1939 (VII of 1939) the Section was again amended and it then said : "Where any Act of the Central Legislature enacts that income-tax shall be charged for any year at any rate or rates, tax at the rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually." By the same Amending Act (VII of 1939), sub-section (3) of Section 9 was also added. Now, Section 3 imposes a tax "in respect of the total income.... of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually." In the absence of any definition as to what constitutes an association of persons, we must construe the words in their plain ordinary meaning and we must also bear in mind that the words occur in a section which imposes a tax on the total income of each one of the uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and followed in a number of later decisions of different High Courts to all of which it is unnecessary to call attention. It is, however, necessary to add some words of caution here. There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a conclusion that there is an association of persons within the meaning of Section 3; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not. Learned Counsel for the appellant has suggested that having regard to Sections 3 and 4 of the Indian Income-tax Act, the real test is the existence of a common source of income in which two or more persons are interested as owner or otherwise and it is immaterial whether their shares are specific and definite or whether there is any scheme of management or not. He has submitted that if the persons so interested come to an arrangement, express or tacit, by which they divide the income at a point of time before it emanates from the source, then the association ceases; otherwise it continues to be an association. We have indicated above what is the crucial test in determining a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual coowners who jointly owned the property and provided the service of renting of immovable property, and received the rent in proportion to the shares in the immovable property. 10. In the result, the impugned orders are set aside and the appeals are allowed with consequential relief, if any, as per law. (b) CCE, Nasik vs. Deoram Vishrambhai Patel - The following order was passed: "6. We have considered the submissions made by both sides and perused the records. The issue that needs to be decided in this case is whether the respondent and his brothers are to be treated as association of persons or other vise and service tax liability on it arises, should be confined without the benefit of the Notification No. 6/2005-S.T. 7. It is undisputed that the property which has been rented out by the respondent and his brothers is jointly owned property; Service Tax liability arises on such renting of property. 8. On deeper perusal of impugned order, we find that the first appellate authority has considered all the angles in the dispute and came to the correct conclusion. The findings of first appellate authority is as under. "6.2 On mere reading of the Order-in-Origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts received by them during these two years by virtue of Notification No. 6/2005-S.T., dated 1-3-2005. The appellant's case is also supported by the Tribunal's decision in the case of Dinesh K. Patwa v. CST, Ahmedabad which is referred in Para 3(ii) above. However, in the Financial Year 2009-10 and 2010-22, the receipt off rent by each appellant exceeded the statutory exemption limit of Rs. 10 lakhs and the appellants have paid service tax along with interest on their own before receipt of SCN. This fact is not disputed by the department also and no additional tax liability has been worked out for the said period in OIO. 6.4 Since the appellants were individually liable to pay service tax and eligible for the exemption under general exemption Notification 6/2005-S.T., dated 1-3-2005 during the period 2007-08 and 2008-09, no service tax was payable during the said period. Hence, the question of penalty under Section 76 for the said period does not arise. For the subsequent period i.e. 2009-10 & 2010-11, the appellants have already accepted their tax liability and paid Service tax along with interest on 14-2-2012. The said payment of service tax is certainly a delayed pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand raised on the respondents by extending the benefit of Notification No. 6/2005-S.T. We do not find any reason to interfere in such a detailed order. 10. Since the respondents are not in appeal against the said impugned order against the imposition of penalty under Section 77 of the Finance Act, 1994 the order to that extent needs to be a upheld. 11. The appeal filed by the Revenue to the extent its challenges the impugned order is devoid of merit and liability to be rejected and we do so. 12. The appeal is rejected." (c) Anil Saini & Ors. vs. CCE, Chandigarh - The Tribunal passed the following order :- "3. Heard the ld. DR, Shri Rajeev Ranjan, Joint Commissioner and Shri Pawan Kumar Singh, Superintendent who have taken me through the grounds of appeal and contended that as per the definition of "person" in Section 3(42) of the General Clauses Act, 1897 the respondents are a body of individuals. 4. Heard, Shri Sita Ram (Consultant), for the respondents. He contended that though the agreement for rent was signed through a single document by all the individual co-owners of property. Annexure-1 to the said agreement dated 5-3-2008, very clearly establishes that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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