TMI Blog2014 (1) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... or by the transferee, who accepts the transfer on such terms. In the absence of any restrictive signification in Section 65 (105)(zzzz), of a legislative intent to exclude long term leases of immovable property from the purview of the taxable service defined and enumerated in said provision, we find no authority to hold that long term leases (so-called) are outside the purview of the taxable service. Renting of vacant land - Held that:- renting of vacant land by way of lease or licence (irrespective of the duration or tenure), for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1.7.2010, and not so, earlier to this date. Since the show cause notice did not specifically demand nor the assessee care to furnish details and particulars of the lease transactions and of the several categories of receipts, in respect of vacant lands leased by it for business or commercial purposes; nor had asserted in defence, which of the leases were not in furtherance of business or commerce; and since the adjudicating authority also did not, in the circumstances, advert to this aspect of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing the taxable service "renting of immovable property". On receipt of information that the assessee was collecting lease rents under various heads like lease rent (industrial), lease rent (commercial), rent (commercial), rent (industrial), other rents etc. on which service tax is remittable as per provisions of the Act, Revenue initiated the proceedings. Several notices were issued followed by summons as well. Para 2 of the show cause notice sets out in great detail the wholly uncooperative attitude of the assessee to the several notices issued by Revenue and the obstructionist strategies adopted by the assessee to the process of assessment. The assessee appears to have considered itself above and beyond the reach of assessment proceedings and adopted a condescending posture, in failing to respond to several notices issued. At one stage Revenue had to file a complaint in the Court of Special CJM, Meerut and had obtained an order from that Court, for appearance of the assessee's representative, in response to summons issued, which were not honoured. Eventually, on the basis of partial information furnished by the assessee including balance sheet and income and expenditure ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zzz). In addition to this specific defence the assessee also asserted that invocation of the extended period of limitation was unjustified since it was under a bona fide belief that leasing of vacant land was not taxable service; and that as public authority it could not be attributed with a mala fide intention to transgress provisions of the Act with an intent to evade tax. After due process and affording personal hearing as well, the adjudicating authority passed the order dated 26.2.2013. 4. The Commissioner rejected the contention that renting of vacant land for business or commercial purposes prior to 1.7.2010 was not liable to service tax as "renting of immovable property". For this conclusion, the Authority based his analyses on Board Circular dated 26.2.2010 and on the Amendment introduced to the relevant provision, by the Finance Act, 2010. The assessee's contention that a long term lease would not amount to renting of immovable property within the meaning of the relevant provision was also negated, by reference to the provisions of Section 105 of the Transfer of Property Act, 1882 and analysis of dictionary meanings of the expressions "demise", "lease", "lessee" and "le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be an open-ended, ambiguous and inchoate concept. Neither does the relevant provision exclude "long term' leases from the purview of the definition nor is any authority, statutory or otherwise brought to our attention which provides a guidance to classify leases into long term and short term. We therefore find no justification for a restrictive interpretation of the relevant provision of the Act. 7. Ld. Counsel for the appellant has referred to an interim order of this Tribunal dated 8.11.2012 passed in an appeal preferred by the Greater Noida Industrial Development Authority. While granting waiver of pre-deposit in full, the Tribunal observed that the ordinary meaning of "renting" will not cover long term leasing. To buttress this prima facie conclusion the Tribunal referred to the decision of the Delhi High Court in Krishak Bharati Co-operative Ltd. vs. Dy. CIT in ITA No.205/2010 dated 12.7.2012 . We therefore refer to the context and circumstances in which the decision of the High Court was pronounced. The High Court had answered a question of law framed for its consideration. The question referred was whether amortizing the lease premium paid by the assessee was a capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provided : "to any person, by any other person, by renting of immovable property or any other service in relation to such renting, for use in the course of or for furtherance of, business or commerce.] Explanation 1. - For the purposes of this sub-clause, "immovable property" includes - (i) building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, but does not include - (a) vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (a) vacant land solely used for agricultural, aquaculture. farming, forestry, animal husbandry, mining purposes; in sub-clause (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; and in sub-clause (c) land used for educational, sports, circus, entertainment and parking purpose, are excluded from the purview of "immovable property". On a true and fair construction of the exclusionary clause, the legislative intent is compelling that vacant land whether having facilities clearly incidental to its use as such or otherwise does not constitute immovable property. As a consequence of the interplay between the enumeration of renting of immovable property as the taxable event read with the inclusionary and exclusionary clauses (in particular sub-clause (b) of the exclusionary clause) in Section 65 (105)(zzzz), renting of vacant land was clearly outside the purview of the taxable service, prior to 01.07.2010. 12. Introduction of sub-clause (v) in Explanation I has significantly altered and extended the scope of the taxable service, with effect from 1.7.2010 and consequently vacant land given on lease or licence, for construction of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or a temporary construction at a later stage to be used for furtherance of business or commerce, within the ambit of "immovable property' is thus the taxable service. Since the introduction of this sub-clause in Explanation I expands the scope of the taxable service and renders the taxable (a) hitherto non-taxable transaction, and absent of explicit retrospective reach provided to the amendment and insertion of this sub-clause, these transactions covered by this sub-clause of the Explanation have only the prospective operation. 15. On the above analysis, renting of vacant land by way of lease or licence (irrespective of the duration or tenure), for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1.7.2010, and not so, earlier to this date. 16. Since the show cause notice did not specifically demand nor the assessee care to furnish details and particulars of the lease transactions and of the several categories of receipts, in respect of vacant lands leased by it for business or commercial purposes; nor had asserted in defence, which of the leases were not in furtherance of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding, we consider it appropriate to reiterate our strong disapprobation of the conduct of the appellant in failing to co-operate with the Service Tax Department in promptly and adequately responding to notices of hearing and summons issued and failing to furnish the requisite records and relevant documents. The appellant is an assessee and cannot delude itself by an assumption that it is immune to the process of law or adopt a condescending attitude towards the formal processes of law. We make it clear that irrespective of its status as a public authority, the appellant is an assessee. We hope and trust that the appellant would conduct itself in future with greater fidelity to the mandate of law, including assessment proceedings. 20. In the facts and circumstances of the case and on the analysis above, the adjudication order dated 26.2.2013 passed by the Commissioner, Central Excise, Customs and Service Tax, Noida (impugned herein) is quashed and matter remitted to the said authority for passing a fresh adjudication order, commencing from the stage subsequent to the show cause notice dated 19.10.2012. The appellant is at liberty to submit its written response to the said show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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