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TMI Blog2025 (3) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... art City (Kochi) Infrastructure Pvt. Ltd. and it is also an accepted fact that the said area is declared as SEZ. The fact being so, the service tax demand for the above said lease deed considering it as not covered under the Notification No.41/2016 dated 22.9.2016 is unsustainable. It was also brought to the notice of the appellant that the levy of tax was not in force at the time of entering in to lease agreements as the old lease agreements were entered on November 17, 2007 and July 29, 2008 and the total lease premium was paid by SCIPL at that time but due to certain technical reasons these two lease deeds were cancelled on February 23, 2011 and the lease premium received for the old lease agreements were adjusted in the new lease agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016, taxable services provided by the State Industrial Development Corporations granting long term lease of industrial plot is exempted from service tax on the one time upfront amount for such lease. However, alleging that the activity is falling under the category of 'Renting of Immovable Property Service', proceedings were initiated and show-cause notice was issued on 08.02.2016 demanding service tax of Rs.10,71,20,000/- with interest and proposal for penalty. However, considering the exemption under Notification No.41/2016 dated 22.9.2016, adjudication authority dropped the demand. Aggrieved by the said order, department filed present appeal. 2. When the appeal came up for hearing, the learned Authorised Representative submits that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity has adopted a broader prospective and considering the above, the demand was dropped. 4. Heard both sides. It is an admitted fact that the lease deed was executed for entering into a Special Purpose Vehicle under Smart City (Kochi) Infrastructure Pvt. Ltd. and it is also an accepted fact that the said area is declared as SEZ. The fact being so, the service tax demand for the above said lease deed considering it as not covered under the Notification No.41/2016 dated 22.9.2016 is unsustainable. Further, as per the reply dated 19.12.2013 submitted by the respondent, it is specifically stated that the impugned land was acquired and allocated to SCIPL by the Government of Kerala for the purposes of setting up of a SEZ and that the Govt. Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no liability for the State to pay service tax on account of leasing of its property in exercise of the powers conferred under Article 246 read with List II of the 7th Schedule of the Constitution of India. Service tax is payable only for services rendered by a 'person' to 'another person' and State of Kerala will not come within the definition of a 'person' and it is performing the constitutional functions only. It was also submitted that long term leases agreement for sale of immovable property and thus, long term leasing cannot be considered as a taxable event. We do not find any reason to disagree with the above facts and reasoning of the Respondent. 5. In view of the above, impugned order is upheld and the appeal filed by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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