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TMI Blog2025 (1) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... lty; the demand was confirmed along with interest and penalty vide order dated 20.09.2013. On an appeal filed by the appellants, learned Commissioner (Appeals) vide impugned order dated 24.07.2014 partially allowed their appeals setting aside the penalties imposed under Section 77 & 78 while confirming the service tax demanded with interest. 2. Shri Rajiv Agnihotri, learned Counsel for the appellants submits that both the appellants are individuals having joint share in the property and have rented out the property to M/s Crystic Resins India Pvt. Ltd. and have been receiving rent separately through cheque individually; individually, the consideration received by them for the service "Renting of Immovable Property" was exempt from payment of service tax as the consideration received was less than the exemption limit of Rs.10 Lakhs. He submits that the issue is no longer res integra and Tribunal has held the issue in favour of the appellants in many cases. 3. Shri Harish Kapoor, learned Authorized Representative for the Department, reiterates the findings of the impugned order. 4. We have heard both sides and perused the records of the case. As submitted by the learned Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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Service Tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year; (ii) the provider of taxable service shall not avail the Cenvat credit of Service Tax paid on any input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 Service Tax, and used for the provision of taxable services for which Service Tax is paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed 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. 4. This notification shall come into force on 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 received by each co-owner in proportion to his share in the immovable property rented/leased. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 units of assessment mentioned therein including an association of persons. The meaning to be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary 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 an association of persons within the meaning of Section 3, and we are of the view that the test ..... X X X X Extracts X X X X X X X X Extracts X X X X
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