Whether co-owners of property to be treated as separate service providers?

PJ/CASE LAW/2014-15/2421

Case:-JAYABEN CHIMANLAL PATEL RATILAL NARANJI PATEL AND OTHERS Vs COMM. OF C.E. AND S.TAX, MANGALORE

Citation:-2014-TIOL-1911-CESTAT-BANG

Brief facts:-The appellant in appeal No.ST/20873/2014 is seeking condonation of delay of 377 days in filing the appeal. It was submitted that this is supplementary appeal against the common order passed and hence the appeal. Accordingly the delay is condoned and the matter is taken up for decision. Since the appeals filed by Shri Ratilal Naranji Patel and Ms. Jayaben Chimanlal Patel involve the same issue, both the appeals are taken up together and a common order is passed.

Appellant’s contention:-The learned counsel on behalf of the appellants submits that in this case the service tax has been demanded on the ground that the claim of the appellants that these co-owners of the building have to be treated as separate service providers cannot be accepted and the two appellants in this case are to be considered as one person and hence service tax has to be paid. It is also stated that applicants received one common cheque which is deposited in joint account and therefore SSI exemption cannot be allowed individually. He also submits that each of the applicant has to be considered as a separate entity. The property was inherited by the appellants and shared area also as per the Succession Act. Lease agreements have been entered into in individual names and the appellants are filing separate Income Tax returns.

Respondent’s contention:-The learned AR submits that in view of the fact that a common cheque is received and deposited in the joint account and the appellants are represented as HUF, the demand has to be confirmed.

Reasoning of judgment:-On going through the Income Tax returns, Hon’ble Tribunal find that returns have been filed in the individual capacity and not HUF. As submitted by the learned counsel, the issue is covered by the precedent decision of the Tribunal in the case of Dinesh Chandra V. Patel Vs. CST, Ahmedabad [2013 (31) STR 296 (Tri. Ahmd.)]and other decisions relied upon by the learned counsel. Moreover they also find that show-cause notice itself recognized the appellants in two groups one of the present two appellants and other of the children of the brother of father of Shri Ratilal Naranji Patel. In view of these facts and circumstances and in view of the precedent decisions of the Tribunal, they consider that in this case also, the requirement of pre deposit has to be waived and stay against recovery has to be granted during the pendency of appeals.

Decision:- stay granted.

Comment:-The analogy of the case is that the co-owners of the property providing renting services are to be treated as separate service providers because the lease agreement have been entered into in individual names and the appellants are filling separate Income Tax returns in the individual capacity and not in HUF.

Prepared by :- Monika Tak

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PJ/CASE LAW/2014-15/2421

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