TMI Blog2015 (4) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the term lease is concerned, it may be recorded that it has not been defined under the Finance Act, 1994. The term "lease" would cover a lease for any period including a lease in perpetuity, as will follow from simple reading of Section 65 (90a). The Finance Act, 1994 does not carve out any distinction in the mater of long term lease/lease in perpetuity or lease for short duration, so far as the charging section is concerned. - No illegality in the conclusions drawn by the Tribunal that the lease of immovable property under Section 65 (105) (zzzz) would be covered for service tax, irrespective of the fact that the lease is short term or long term or lease in perpetuity. - Letting of immovable property for consideration, which is determined on the basis of offers received from public at large by the assessee Greater Noida Industrial Development Authority is a service provided for consideration and not on payment of statutory fees, neither it is a statutory service performed by the assessee. It may be that the statute permits such activities of letting out of immovable property for augmenting its finances but the same cannot be termed as the service in public interest nor it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the areas within their territorial jurisdiction. The assessee was registered for the purpose of the payment of service tax on renting of immovable properties, services and sale of space for advertisement since 01.06.2007. It has been making payment of service tax on the rent received from constructed immovable properties rented out by it for business or commerce. However, the assessee had not made payment of service tax on the rent which it had received in the matter of allotment of plots of vacant land to various persons on lease for industrial and commercial purposes. 4. With effect from 1st June, 2007, Section-65(105) (zzzz) was introduced in Finance Act, 1994. The section provides for service tax to be levied on service provided to a person by any other person of renting of immovable property or any other service in relation of such renting for use in course of, or for furtherance of business or commerce. Explanation-I to Section- 65(105(zzzz) defines immovable property and it excluded- 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from leasing of vacant land for the purpose of construction of commercial buildings, but they had not paid any service tax thereon. Accordingly, a show cause notice dated 19.03.2012 was issued to the appellant for the period 01.07.2010 to 31.05.2011, whereunder it was disclosed that the appellant received a total amount of ₹ 40,14,15,820/- as lease charges from the allotment of various plots of land for commercial purposes on which service tax was payable. The appellant was, therefore, called upon to pay service tax including education cess to the tune of ₹ 4,13,45830/- alongwith interest. They were also called upon to explain as to why penalty under Section-77(1)(C) and Section-78 of the Finance Act, 1994 be not imposed. 8. The show cause notice was adjudicated upon by the Commissioner, Central Excise and Service Tax, Noida vide order-in-original dated 19.07.2012, the demand was confirmed alongwith interest thereon under Section-75. Penalty of equal amount was imposed on the appellant under Section-78 of the Finance Act, 1994. Another penalty of ₹ 200/- per day starting from the first day after the due date was imposed under Section-77(1)(c) upon the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect despite the fact that second notice pertain the different period and different items/transactions which were subject matter of service tax provided under first notice? (ii) Whether long terms leases in respect of vacant land would be covered by taxable service under section 65(105) (ZZZZ) of Finance Act, 1994? (iii) Whether Greater Noida Industrial Development, Noida constituted under the Industrial Development Act, 1976 can be said to be a body discharging sovereign functions and outside the purview of service tax? (iv) Whether the leases granted in respect of vacant land by appellant before 1.7.2010 would be taxable under the aforesaid statute? 15. An application has been filed on behalf of the assessee dated 30th March, 2015 stating therein that the substantial question of law as framed by the High Court under order dated 11th March, 2015 may be corrected to read as follows: Whether the adjudicating proceeding on second show cause notice dated 17.10.2012 is illegal non-est as it also covers the period, demand and the activity covered by the adjudicating proceeding of first show cause notice dated 22.03.2012 and second show cause notice dated 17.10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance of business or commerce to include use of immovable property as factories, office buildings, warehouses etc. and it has been declared that renting of immovable property includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property. 20. In view of the definition of expression of renting of immovable property read with Explanation, in our opinion, will include the lease of various plots allotted by the assessee for business/ commercial purposes and rent charged/ collected in respect of the lease so executed would necessarily be subjected to service tax. 21. We may record that the term/period of the lease whether it is for short duration or for 90 years or perpetuity makes absolutely no difference to the meaning of the expression renting of immovable property . The contention of the assessee that since long term lease of 90 years/perpetuity would virtually amounts to transfer of ownership of the land does not appeal to us especially in view of the simple meaning of the language use in the aforesaid sections. 22. The judgment of the Apex Court in the case of R.K. Palsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax demanded under show-cause notice dated 22nd March, 2012 is included in the show cause notice dated 17th October, 2012 for want of cooperation from the assessee. It is for this purpose that the Tribunal has remanded the matter to the Commissioner to examine the said plea by de-novo proceedings and to give a specific finding in that respect. The Tribunal has accordingly affirmed the demand as made under the order in original dated 19th July, 2012 only for the normal period of limitation to be quantified by the Commissioner. 28. We may record that under show cause notice dated 22nd March, 2012 demand of service tax including the Education Cess was made for the period between July, 2010 to May, 2011. So far as the second show cause notice dated 17th October, 2012 is concerned, service tax was demanded along with interest for the period between May, 2007 to March, 2012 on the following amounts: (a) one time premium amount; (b) annual lease rent; (c) fee charged for examination of the applications; (d) transfer charges; (e) rent received from the staff (f) other misc. income as compliance fees etc. (g) misc. income as malba charges etc. 29. We may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken falls within the scope of a taxable service as defined. 35. Letting of immovable property for consideration, which is determined on the basis of offers received from public at large by the assessee Greater Noida Industrial Development Authority is a service provided for consideration and not on payment of statutory fees, neither it is a statutory service performed by the assessee. It may be that the statute permits such activities of letting out of immovable property for augmenting its finances but the same cannot be termed as the service in public interest nor it is a mandatory or statutory functions of the Development Authority. Accordingly such activity of leasing, do constitute a taxable service, in our opinion. 36. The judgment relied upon by the learned counsel for the petitioner in the case of Krishak Bharati Cooperative Ltd. v. Deputy Commissioner of Income Tax passed in Income Tax Appeal No. 205 of 2010 decided on 12th July, 2010 is clearly distinguishable in the facts of the present case. The other judgments referred to by the learned counsel for the petitioner i.e. (1) CIT v. Panbari Tea Co. Ltd. (AIR 1965 SC 1871, (2) Smt. Shanti Sharma and Others vs. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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