Whether SSI exemption separately available to the co-owners of immovable property?

PJ/Case Law/2014-15/2140

Case:- CHUNIBEN S. JADIA Vs COMMISSIONER OF SERVICE TAX, AHMEDABAD

Citation:- 2013 (30) S.T.R. 479 (Tri. - Ahmd.)

Brief facts:- This application was filed for waiver of pre-deposit of amount of Service Tax liability of Rs. 2,66,976/-, interest thereof and penalties under Sections 76, 77 & 78 of Finance Act, 1994.

Appellant’s contentions:- Learned Chartered Accountant on behalf of the appellants submitted that all the above individuals were co-owner of a particular building and had rented out the premises to a person, who issued different cheques to all the above individuals as they were co-owners. It was 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 vides Notification No. 8/2008-S.T., dated 1-3-2008. It was his submission that the Revenue had considered the amounts received by all of the applicants as collectively and seeking to charge the Service Tax liability individually on the persons.

Respondent’s contentions:- Ld. D.R., on the other hand, submitted that the property involved in this case was jointly owned by all the persons and the said property was being rented out and hence there was service of renting out of an immovable property. It was his submission that for individual purposes, and for the purpose of benefit of individual co-owners, the appellants sought the payment individually. It was his submission that the department was 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, the Bench found 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 had not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In these cases, if the cheques for rent were received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they were renting out the property to a person. On perusal of the said notification, they found 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 did not exceed the threshold limit. Prima facie, they found that the appellants had made out a case for waiver of pre-deposit of amounts involved.
Accordingly, the applications for waiver of pre-deposit of amounts were allowed and recoveries thereof stayed till disposal of appeals.

Decision:- Stay application allowed.

Comment:- The analogy drawn from the case is that if the cheques for rent are received individually by all the appellants who are the co owners of immovable property and if individually all the appellants be considered as provider of such service and their aggregate value did not exceed the threshold limit then they could avail 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.

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PJ/Case Law/2014-15/2140

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