TMI Blog2014 (8) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... gn function - Held that:- As regards the argument that the appellant was an agent of Government of Maharashtra and was performing a statutory function and therefore, the levy of service tax would not apply, this argument is completely misplaced. - The law does not distinguish between the Government and non-Governmental agencies. It merely says that the activities of rendering of services (as defined in law) would be leviable to tax. Regarding vacant land - Held that:- Prior to 01/07/2010, there was no provision for levy of service tax on vacant land given on lease. Considering the fact that the appellant does not have a prima facie case, especially for the period post 01/07/2010 and also taking into account the financial hardship pleaded, we direct the appellant to make a pre-deposit of ₹ 20 Crore (Rupees Twenty Crore only), which is approximately the demand for the normal period of limitation - stay granted partly. - ST/89766/13 - Stay Order No. S/707/2014-WZB/C-I(CSTB) - Dated:- 7-7-2014 - P R Chandrasekharan And Ramesh Nair, JJ. For the Appellants : Mr V Sridharan, Sr. Adv. and Shri L Badrinarayan, Adv. For the Respondent : Mr P M Saleem, Comm. (AR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order resulting in confirmation of the service tax demand and imposition of penalties. Aggrieved of the same the appellant is before us. 3. The learned Counsel for the appellant made the following submissions:- 3.1 The first contention is that there are two agreements involved in this case. One is an agreement to lease for which the premium amount is paid. As per this agreement to lease, CIDCO leases vacant lands to private parties for developing structures thereon and the intending lessee, upon payment of the premium, acquires the right to construct a building or any other complex. Thereafter, the construction has to be completed within a period of three years. On completion of the construction, M/s. CIDCO enters into another agreement with the lessee whereby it leases the plot of land along with the structure for a term of sixty years for a rental of Rs./- per annum. Since the agreement to lease' and the lease agreements' are different in law, what can be levied to service tax is only the rental payable as per the lease agreement and it is only this activity which can come under the service tax net. The premium collected on execution of agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by the lessee can be subject to service tax and therefore, the impugned demands are not sustainable. 3.3 Secondly, it is argued that prior to 01/07/2010, Section 65 (105) (zzzz) did not include in its purview, vacant land whether or not having facilities clearly incidental to use of such vacant land within its scope and only with effect from 01/07/2010 the scope of levy was extended to cover vacant land given on lease or licence for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce . Since the agreement to lease does not provide for lease of vacant land, the same could not have been levied to service tax prior to 01/07/2010 and therefore, if demand for this period is excluded, the same would come down substantially. 3.4 The third argument put forth is that the appellant is a Government of Maharashtra undertaking and the land belongs to the Government of Maharashtra and not to the appellant. The appellant is a mere agent undertaking development of land. Since the activity undertaken by the appellant is a statutory function, service tax cannot be levied on such functions. Reliance is placed on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the said definition cannot be applied for the previous period. He also submits that the appellant is facing financial hardship and they are incurring losses and this fact should be kept in mind, while considering the petition for stay. 6. We have carefully considered the submissions made by both the sides. 6.1 As per the definition of renting of immovable property under Section 65 (90a), - renting immovable property includes, renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce. Similarly, Section 65 (105) (zzzz) defines the taxable services as, - any service provided or to be 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. With effect from 01/07/2010, vacant land given on lease or licence for construction of building or temporary structure at a late stage to be used for furtherance of business or commerce was also brought under the service tax levy. 6.2 The expressions other similar arrangements used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Supreme Court on a reference made by the President of India in the context of Section 20 of the Sea Customs Act, 1876 reported in 1964 (3) SCR 787. The question formulated for decision by the Hon'ble Supreme Court was as follows: (1) Do the provisions of article 289 of the Constitution of India preclude the Union from imposing, or authorizing the imposition of, customs duties on the import or export of the property of a State, used for purposes other than those specified in clause (2) of that article? (2) Do the provisions of article 289 of the Constitution of India preclude the Union from imposing, or authorizing the imposition of, excise duties on the production or manufacture in India of the property of a State used for purposes other than those specified in clause (2) of that article? (3) Will sub-section (2) of Section 20 of the sea customs Act, 1878, (Act 8 of 1878) and sub-section (1A) of section 3 of the Central Excise and Salt Act, 1944 (Act 1 of 1944) as amended by the Bill set out in the Annexure to inconsistent with the provisions of articles 289 of the Constitution of India? By the majority decision, it was held as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here from are the profit and loss of the Corporation. The income derived from its trading activities cannot be said to be the income of the Andhra Pradesh State under art. 289 of the Constitution. In view of the above decisions of the hon'ble Apex Court we do not find any merit in the contention of the appellant it is not liable to tax being an agent of the Government. 6.4 As regards the contention of the appellant that levy would apply only with effect from 01/07/2010, with the insertion of clause (v) in Section 65 (105) (zzzz) which provided for levy on vacant land given on lease or license for construction of building or temporary structure at a later stage to be used for the furtherance of business or commerce , this contention appears to have some merit. Prior to 01/07/2010, there was no provision for levy of service tax on vacant land given on lease. 6.5 As regards the issue of time bar raised by the appellant, this is both a question of fact and a question of law which could be considered at the time of final hearing of the appeal. 6.6 As regards the financial hardship pleaded by the appellant, no evidence has been produced before us though it has been submitte ..... 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