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2019 (2) TMI 869 - AT - Service TaxClassification of services - Renting of immovable property services or not - ‘Advance Development Cost’ received from Developers towards development of common infrastructure facilities - extended period of limitation - Held that:- Development of Common Infrastructure facilities outside Asset Area cannot be construed as ‘Renting of Immovable Property’ or a service in relation to the renting of immovable property. The treatment of reimbursement of cost, of common facilities, as ‘Renting Service’ by the Adjudicating Authority is not legal because such common facilities were developed by taking advances as a pool of fund, for the infrastructure to be used by common beneficiaries and the account was to be settled as per Agreement by returning excess, if any, or charging deficit, etc. if any, if the cost of the works exceeded or was less than the amount collected as advance. For rent on immovable property service, the expression ‘in relation to’ has to be read in conjunction with the expression ‘rental’. The term ‘rental’ even in enlarged form of Lease, Rent, Licence, etc., cannot encompass anything done for development of the common facility/ property. There is difference between anything done in relation to ‘renting of immovable property service’ and anything done in relation to ‘immovable property’ per-se, which is in common domain. The latter cannot fall within the ambit of the former. From the definition of Renting of Immovable Property Services as contained in Section 65(105)(zzzz),, it is evident that in order to be covered under renting of immovable property services, the nature of the activity should be that of renting or letting or leasing or licensing or other similar arrangements of immovable property for use in the course or furtherance of business. In the present case, there is no Service Provider-Service Recipient relationship between the appellant and the Developers, as regards the Advance development cost, because common facilities developed belong to none (held in trust) and the benefit is derived by all the 13 developers, as well as the public. Hence the same is not liable to Service Tax - Advance development cost is not consideration for any services rendered, therefore, Section 67 has been improperly invoked to take gross value as consideration for alleged services provided, even when whole of the deposit is liable to be spent and nothing retained as per the IDSA agreement. It is settled law that service tax, if any, is not applicable on the Advance Development Cost received prior to 01.07.2010. In the instant case taxable event happened even prior to the date when licensing of vacant land was included in the renting of immovable services w.e.f 01.07.2010. Therefore, taxable event having occurred earlier to the point of levy of service tax, the same cannot be levied. The ‘Infrastructure development cost’ as per IDSA is not covered under renting of immovable property and is not chargeable to service tax - appeal allowed - decided in favor of appellant.
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