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2017 (9) TMI 885 - AT - Service TaxRenting of immovable properties - leasing out the fuselage of Airbus alongwith the connected premises of land - whether leasing out aircraft amounts to Business Auxiliary Services or Renting of immovable property services? - Held that: - there are two distinct properties which are given on lease. The lease rental contribution attributable to each one of the property has been categorically stated by the main appellant when the enquiry was conducted. There is no dispute about the consideration attributable to each one of the property. We do not agree with the appellant that the consideration has been artificially split up and brought under tax liability under two tax entries. When two properties are specifically, identified considering the nature and scope of service for which lease rent is received, we find that the lower authorities are correct in their conclusion. It is clear that the aircraft premises and the other equipments are very essential and imperative infrastructure for providing training to the participants and also to make publicity about the status of the training institute. As already noted, the training of cabin crew is imparted both in the class rooms and inside the aircraft for practical exposure. The aircraft in possession of the main appellant serves this very basic infrastructural requirement of the training by the lessee. As such, we find that lease rent attributable to this activity is rightly taxable under business support service. The second property indicated in the lease agreement is 550 sq. yards of the appellant, we note that the lessee is also to have an office premises of their choice location within the leased out land - The property lease out by the main appellant is for the furtherance of business and commerce and accordingly liable to tax. As such, we hold that the lower Authorities are correct in confirming the tax liability of the main appellant as well as Mrs. Bhateri Devi under the category of renting of immovable property service on the consideration received by them and clearly admitted by them. Penalty - Held that: - renting of immovable property service has been a subject matter of substantial litigation, and also the tax entry was interpreted to mean only services “in relation to” renting of not renting per-se - Later, amendments were brought in, in the statutory definitions alongwith retrospective changes also. A specific provision was also made in Section 80 (2) of the Finance Act, 1994 for waiver of penalty in respect of renting of immovable property service - penalties imposed on the appellants can be waived by invoking provision of Section 80 of the Finance Act, 1994 as there was reasonable cause for non-payment of service tax during the material time. Appeal dismissed - decided partly in favor of appellant with regard to penalties only.
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