2023 (4) TMI 262 - AT - Service Tax

Levy of service tax - renting of property jointly owned by five persons - each appellant became an independent service provider in respect of renting of immovable property - whether appellants are liable to service tax by clubbing of all five persons or otherwise? - no legal entity like Body Corporate or Association of Persons - total rent falls below the threshold limit of exemption under Notification No. 6/2005-ST dated 01.05.2005 or not - HELD THAT:- Clubbing the property as co-owned by the persons, five appellants own equal share. All the appellants entered into lease agreement with Reliance Industries Limited and for this, each appellant became an independent service provider in respect of renting of immovable property. As per facts, there is no legal entity such as Association of Persons of Body Corporate, each person owns the property. As per lease agreement, every individual is independent owner of his share. The rent is also paid by the service recipient to each individual. In such case, every individual become a separate service provider hence, if at all service tax arises, it needs to be assessed in respect of every individual. Further, the rent received by the individual is well within the threshold limit provided for exemption under Notification No. 6/2005-ST dated 01.05.2005. Therefore, there is no service tax liability on any of the appellant.

Identical issue has been considered by this Tribunal in the case of M/S NEENABEN R DOSHI, MANJU MUKESH GARG & GUNJAN PARVESH GARG, RITABEN PIYUSHKUMAR DOSHI, KISHORBHAI PRANJIVANDAS MANDALIA, VIPULKUMAR ZAVERILAL MANDALIA, PRANJIVANDAS MANDALIA, CHANDRESHBHAI ZAVERILAL MANDALIA, BHANUBEN PRANJIVANDAS MANDALIA, PRAFULLABEN ZAVERILAL MANDALIA, FENNY CHANDRESH MANDALIA, SMT. ARUNA KISHOR MANDALIA, SHRI SHEKHAR KANAIYALAL SHAH, BHANUBEN PRANJIVANDAS MANDALIA, DAKSHA BHARATKUMAR MANDALIA, MRUDULA KANAIYALAL SHAH, SUJATA SHEKHAR SHAH, HEMALI VIPUL MANDALIA, ZAVERILAL VIRJIBHAI MANDALIA VERSUS C.S.T. & S.T. - AHMEDABAD [2019 (5) TMI 1485 - CESTAT AHMEDABAD] where it was held that receipt of rental income by every individual is only subject to liability of service tax. If the value is below thresh-hold exemption limit in case of any individual, the same will not be taxable being exempted under Notification No. 06/05-ST dated 01.03.2005. At the same time in case of any individual person if the thresh-hold limit exceed in financial year, the same will be liable for service tax.

The issue is no longer res-integra - Appeal allowed.