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2019 (12) TMI 645 - CESTAT MUMBAINature of activity - service or sale - "lease of 999 years" is equivalent to "sale" or not - renting of immovable property service or not - conducting agreement in which the appellant, M/s Starcity Entertainment Pvt Ltd, executed with the ‘conductor’, M/s Movie Time, for granting ‘conducting rights’ which also included an option to purchase, or lease, the theatre belonging to them - It is the contention of Learned Counsel that the transaction is nothing but a sale and hence beyond the pale of taxability under Finance Act, 1994. HELD THAT:- The appellant herein had initially contracted with M/s Movie Time for the use of the theatre for ‘conducting’ and, on exercise of option, purportedly, of purchase, transferred possession itself against annual ‘lease rental’ and one-time ‘premium’ components. This would, prima facie, bring the contractual agreement within the scope of the rentals - Furthermore, as pointed out in the impugned order, the entire property, and its benefits thereof, had not been alienated by the appellant; the retention of right to built-up space above and around the contracted property was incorporated in the agreement. It could, therefore, by no means be determined to be a ‘sale’ agreement as commonly understood. Accordingly, the consideration is for the limited use of the property which squarely fall within the scope of section 65(105)(zzzz) of Finance Act, 1994. The decision in HOBBS BREWERS INDIA PVT. LTD. VERSUS UNION OF INDIA [2016 (4) TMI 1173 - TRIPURA HIGH COURT] has made it abundantly clear that the claim of the petitioner therein for restricting the taxability to rent, and not the premium, was dismissed thereby laying down the principle that ‘premium’ is nothing but an advance ‘rent’, and, therefore, taxable which was adopted by the Tribunal in RIICO LTD., M/S RAJASTHAN STATE INDUSTRIAL DEVELOPMENT & INVESTMENT CORPN. LTD. VERSUS CCE, JAIPUR-II [2017 (5) TMI 673 - CESTAT NEW DELHI] to hold that, though premium was also taxable, an exception was carved out for lease tenor exceeding 30 years arising from the specific provision incorporated through section 104 in Finance Act, 1994 - Admittedly, this provision does not apply to the present transaction. In the established fact of absence of complete and entire ownership of the property and, in the light of the decision in re Hobbs Brewers India Pvt Ltd and in re RIICO Ltd, ‘premium’ being ‘rent’, except in the peculiar circumstances of transactions with entities of state governments, the only issue that remains for resolution is the extent to which the decision in COMMISSIONER OF SERVICE TAX, NOIDA VERSUS M/S GREATER NOIDA DEVELOPMENT AUTHORITY, GREATER NOIDA [2015 (10) TMI 296 - ALLAHABAD HIGH COURT] favours the appellant. In re Greater Noida Industrial Development Authority there is no lack of clarity in the assertion of the Tribunal that Since the levy of Service Tax is on renting of immovable property, not on transfer of interest in property from lesser to lessee, Service Tax would be chargeable only on the rent whether it is charged periodically or at a time in advance. It appears that the principle of taxability that found favour was discarded in circumstances peculiar to that case and, the absence of challenge in such circumstances, is not to be presumed as acceptance of a contrary proposition - there are thus no contradiction between the two decisions of the Tribunal warranting a different conclusion. Thus, the lump sum payment becomes liable to tax under Finance Act, 1994 in addition to the periodic payments - appeal dismissed.
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