Jagdish Warehouse Owners Association VERSUS C.S.T.-Service Tax – Ahmedabad

Service Tax Appeal No. 482 of 2012-DB

(Arising out of OIA-190-191/2012/STC/AK/COMMR-A-/AHD Dated- 29/08/2012 passed by

Commissioner of Central Excise-AHMEDABAD-II)

 

Jagdish Warehouse Owners Association

VERSUS

C.S.T.-Service Tax – Ahmedabad

WITH

Service Tax Appeal No. 483 of 2012-DB

(Arising out of OIA-190-191/2012/STC/AK/COMMR-A-/AHD Dated- 29/08/2012 passed by

Commissioner of Central Excise-AHMEDABAD-II)

Ravi Chambers Owners Association

VERSUS

C.S.T.-Service Tax – Ahmedabad

 

APPEARANCE:

Shri. Raj Tanna, Advocate for the Appellant

Shri. R.P. Parekh, Superintendent (AR) for the Respondent

CORAM:

HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)

HON’BLE MR. RAJU, MEMBER (TECHNICAL)

Final Order No. A / 10051-10052 /2023

DATE OF HEARING:15.09.2022

DATE OF DECISION:13.01.2023

RAMESH NAIR

The brief facts of the case are that the survey was carried out by

Service tax Commissionerate, Ahmedabad, and it was found that both the

Appellant M/s Jagdish Warehouse Owner Association and M/s Ravi Chambers

Owner Association had rented out the property to State Bank of India. The

said activity is covered under the taxable services under the category of

„Renting of Immovable Property Services‟. A show cause notice was issued 

proposing to demand the short paid service tax along with interest and also

for imposing penalties. In adjudication, the Original Authority vide Order-in

Original dated 30-11-2011 confirmed the service tax demand along with

interest and also imposed penalties. In appeals, the Commissioner (Appeals)

vide impugned order-in-appeal No. 190 to

191/2012(STC)/AK/Commr.(A)/Ahd. Dated 28-08-2012 has upheld the

same. Hence, these appeals.

On behalf of the appellants, Ld. Advocate Shri. Raj Tanna appeared

and argued the matter. He submits that Ld. Commissioner (Appeals) has

erred in law and on the fact of the case in upholding the views of the

adjudicating authority that Appellant association has provided impugned

property on rent in the name of their members and accordingly liable to

discharge the alleged service tax on “ Renting of Immovable Property”.

2.1 He also submits that Both the lower authorities have failed to

appreciate that the Appellant Association is neither the owner of the

impugned property nor have provided impugned property on rent to the

Bank and further not received any rent and accordingly the Appellant

Association cannot be saddled with the liability of alleged service tax on

“Renting of Immovable Property”.

2.2 He further submits that both the lower authorities have failed to

appreciate the facts that 39 individuals own separate, individual and

independent property in their own name and they have provided impugned

properties on rent to state Bank of India in as much as all they are in

receipts of rent separately, individually and independently in their own

names. The gross amount received by the individual owners are not in

excess of threshold exemption limit of Rs. 10 Lakhs and accordingly under

the circumstance they are also not liable to service tax.

2.3 He also argued that individual owners have provided the premises on

rent vide entering into one leave and licence agreement on 06.08.1999,

whereas the levy of service tax on renting of immovable property was

introduced much later in the year 2007 and therefore while acquiring the

properties as well as entering into agreement with the State Bank of India. It

can never be the intention of the Appellants to avoid service tax by showing

that they are independent and separate owners of the respective property. 

The said agreement was further renewed by entering into agreement dtd.

05.08.2008 for further period of 10 years.

2.4 He further summits that vide para 11,12,and 13 of OIA, it was the

observation of the Commissioner (Appeals) that as per the Transfer Property

Act, the three essential condition required to determine ownership of the

property are right to possess, right to enjoy and right to dispose and

accordingly it was allegation of the Commissioner (Appeals) that the

individual owners do not have much right and therefore impugned property

is owned by Jagdish Warehouse Owners Association and Ravi Chambers

Owner Association and it is not owned by the individuals. The Ld.

Commissioner (Appeals) has completely lost sight of the fact that all the risk

and reward attached to the impugned property belong to the individual

owners and not Jagdish Warehouse Owners Association and Ravi Chambers

Owner Association.

Ld. R. P. Parekh, learned Superintendent (Authorized Representative)

appeared and argued the matter on behalf of the Department. He reiterated

the findings of impugned order and submits that the demand of servicetax

on the appellants is correct and proper.

4. We have considered the submissions made by both sides and perused

the records. We find that the rented property are owned by 39 individual in

their name individually and separately and they had entered into lease

agreement with the State Bank of India to provide their individual property

collectively to the Bank through single lease agreement. The Appellants also

placed on records a copy of Lease deed signed by each individual owner,

copies of Municipal Tax Bills issued in the name of each owner separately.

We also find that in the present matter individual owner received the rent

separately and independently. As per the payment terms, Bank paid

different amount of rent to individuals as per their property. Therefore

irrespective of associations of the property, the important aspect is that who

are the parties in the agreement and who have received the payment on

account of renting of immovable property and who is the service provider.

The amount received by individual owner for renting of their immovable

property cannot be clubbed for the purpose of service tax demand.

Therefore, the demand is apparently not sustainable.

In the present matter the Appellants are not the actual service

provider, hence demand of service tax against the appellant legally not

correct. It is very much brought out by the documents that the appellant is

not the absolute owner of the rented property. The lease deed as well as the

related documents shows that the property is owned by the individual

owners and it is not disputed that the income by way of rent is received by

individual owners separately and reflected in their income-tax returns

separately. When the property is not owned by the appellant and they have

not received the rent, the demand of servicetax raised on the appellants

alone, therefore, cannot be sustained. We hold that the demand of service

tax cannot be sustained and requires to be set aside. Consequently, the

impugned order is set-aside.

In the result, the appeal is allowed with consequential relief, if any.

(Pronounced in the open court on 13.01.2023 )

(RAMESH NAIR)

MEMBER (JUDICIAL)

(RAJU)

MEMBER (TECHNICAL)