Shri Syed Ahamed, Shri Khali Alaudeen, Smt. K. Fathima, Kum. S.A. Zainab, Co-owners, LKS Building, Trichy Versus Commissioner of GST & Central Excise Trichy
Service Tax
2018 (10) TMI 400 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 25-9-2018
ST/42605/2014 – 42477/2018
Service Tax
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
For the Appellants : Shri G. Sivakumar, Consultant
For the Respondent : Shri K. Veerabhadra Reddy, ADC (AR)
ORDER
PER BENCH
Brief facts are that the four appellants are equal co-owners of property which was rented out. They received rental income from the property and each co-owner received the rental income and TDS was deducted separately for each co-owner for income tax purposes. Department was of the view that since co-owners have an undivided share in the property, all the co-owners have to be treated as an association of person and the rental income has to be combined together. When
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scale exemption limit. He gave the break-up of all the four appellants which is as under:-
Year
Value of rent as per SCN
Share of each co-owner
Threshold exemption under SSI Notification during the relevant period
1
2
3
4
2 /4
2007 – 08
15,93,499
3,98,375
8,00,000
2008 – 09
21,94,929
5,48,732
10,00,000
2009 – 10
24,25,908
6,06,477
10,00,000
2010 – 11
27,04,404
6,76,101
10,00,000
2011 – 12
29,30,244
7,32,561
10,00,000
3. He thus contended that the department cannot consider all the four co-owners as an association of person so as to demand service tax by combining the rent by each co-owners. He submitted that the issue is decided in favour of the assessees in the following cases:-
a. Anita Singh & Ors. Vs. CGST, CC & CE, Dehradun – 2018 (6) TMI 810 – CESTAT, New Delhi.
b. Sh. Jasdeep Singh & Ors. Vs. Commissioner of Central Excise, Jalandhar – 201 (5) TMI 895 – CESTAT, Chandigarh
4. The ld. AR Shri K. Veerabhadra Reddy supporte
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rs in the property against the total area owned and leased observed that the entire immovable property is given on lease, and there is no specific area that has been allotted to individual owner; thus since each of the co-owners not holding absolute ownership of any identifiable part in the property, hence not entitled to the benefit of said Notification. Further, the co-owners had only undivided interest in whole of the property and no divided interest in separate parts; accordingly, each coowner cannot lease their share of the property independently to the lessee, hence the services of renting of their property since indivisible in nature and hence to be considered as single service. The ld. AR further submitted that the assessment under the Income Tax separately has no effect on Service Tax matters in which the service of renting of property is indivisible and the Appellants are liable to pay Service Tax on the gross value realised in providing the service.
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Revenue that all the coowners providing the service of renting of immovable property be considered as an association of persons and the Service Tax on the total rent be collected from one of the co-owners. Another argument of the Revenue is that since the property is indivisible and not earmarked against each of the co-owners, hence the Service Tax is leviable on the total rent received against the said property without apportioning against each of the co-owners in proportion to their share. We find fallacy in the said argument of the Revenue. Conceptually Service Tax is levied on the service provided, which is an intangible thing and hence it is not necessary to be identified with physical demarcation of the immovable property given on rent against individual coowners.
Once the value of service provided by a service provider is ascertainable Service Tax is accordingly charged. This Tribunal in similar facts and circumstances in the cases of Deoram Vishrambhai Patel, Anil Saini & Oth
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