Whether threshold exemption limit applicable in individual capacity on amount received by co-owners for renting out of immovable property?

PJ/Case Law/2013-14/1940

Case:- DILIP PARIKH VS COMMISSIONER OF SERVICE TAX, AHMEDABAD

Citation:-2013 (32) S.T.R. 243 (Tri.-Ahmd.)

Brief Facts:-These applications are filed for waiver of pre-deposit of amount of service tax liability of Rs. 1,98,828/-, interest thereof and penalties under Sections 77 & 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 Contentions:- Ld. Counsel appearing on behalf of the appellants would submit that all the above individuals are co-owner of a particular building and have rented out the premises to a person, 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. 08/2008-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 Contentions:-Ld. DR, 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 is 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. In these cases, if the cheques for rent are 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 are renting out the property to a person. 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 disposal of appeals.

Decision:- StayApplication allowed.

Comment:-The crux of this case is that in the case of renting of immovable property jointly owned by different persons, the threshold exemption limit would be determined individually for different persons if it is clear that the service of renting of immovable property is being provided by them separately and individually.

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PJ/Case Law/2013-14/1940

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