Whether clubbing of receipts for SSI exemption proper when the premises have been collectively owned by different persons?

PJ/Case Law/2013-14/1827

Case:-MANJU CHAMPAKLAL BAFNA VERSUS COM. OF SERVICE TAX, AHMEDABAD

Citation:-2013 (31) S.T.R.511 (Tri.-Ahmd.)

Brief Facts:-All the five application are file against a common order in appeal for waiver of pre-deposit of an amount of Rs. 1,85,624/- confirmed as service tax liability, interest thereof and
penalties under sections 76, 77 and 78 of Finance Act, 1994.
The issue involved in this case is regarding service tax liability on the above mentioned individuals as a provider of service under the category of Renting out of Immovable Property.

Appellant Contention:-Appellant would submit that all the above individuals are co-owner of a particular building and have rented out the premises to HDFC Bank, who issues different cheques to all the above individuals as they are co-owners. It is his submission that the amount received by the individuals would be within the threshold limit of SSI exemption as granted by Notification No. 6/2005-S.T., dated 1-3-2005 and amended vide Notification No. 8/2008-S.T., dated 1-3-2008. It is his submission that the Revenue has considered the amounts received by all of the applicants as collectively and seeking to charge the service tax liability individually on the persons.
Respondent Contention:-Learned Departmental Representative on the other hand would submit that the property involved in this case is jointly owned by all the persons and the said property is being rented out and hence there is service of Renting out of an Immovable Property. It his submission that for individual purposes, and for the purpose of benefit of individual co-owners, the appellants sought the payment individually. It is his submission that the department is correct in assessing the service tax liability after considering the amount collectively received by the individual appellant.

Reasoning of Judgment:- After considering the submissions made by both sides, we find that benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit.Prima facie, we find that the appellants have made out a case for waiver of pre- deposit of amounts involved. Accordingly, the applications for waiver of pre- deposit of amounts are allowed and recoveries thereof stayed till the disposal of appeals.

Decision:-Stay application is allowed.

Comment:-The essence of this case is that clubbing of clearances is not proper prima facie if the property is owned by different persons jointly and has been rented out to a third person. The receipts of rent that are received by different persons should be individually seen for the purpose of SSI exemption. As the aggregate value of service when seen individually did not exceed the threshold limit, stay application was allowed.

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PJ/Case Law/2013-14/1827

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