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Commissioner of Service Tax, Noida Versus M/s Greater Noida Development Authority, Greater Noida

2015 (10) TMI 296 - ALLAHABAD HIGH COURT

Levy of service tax on letting out of vacant land in furtherance of business and commerce - w.e.f. 01.07.2010 or w.e.f. 01.06.2007 - Held that:- The findings of the tribunal in case of NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX [2014 (1) TMI 1203 - CESTAT NEW DELHI] are legally justified - In view of clear exclusion of vacant land from the ambit of immovable property prior to 1.7.2010 it cannot gainfully be contended by Revenue, that clause ( .....

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rvice defined and enumerated in Section 65(105)(zzzz) , of the Act. These several contemporaneous exposition and administrative constructions and the scope of sub-clause (v) of Explanation I in Section 65(105)(zzzz) fortify the conclusion the scope of sub-clause (v). To modify and expand the scope of the taxable service to cover and include vacant land on lease or licence for construction of a building or a temporary construction at a later stage to be used for furtherance of business or commerc .....

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ce (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. - Decided in favor of assessee. - Central Excise Appeal No. 41 of 2015 - Dated:- 30-3-2015 - Arun Tandon and Dr. Satish Chandra, JJ. ORDER The Commissioner of Service Tax, Noida has filed this appeal against the order of the Customs, Excise & Service Tax A .....

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appeal are as follows: The assessee is a statutory body constituted under the U.P. Industrial Development Act, 1976. It has been discharging statutory functions while monitoring and carrying on the development of 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 fr .....

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mmovable 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 provides,- ******************** (zzzz) to any person, by any other person in relation to renting of immovable property for use in the course or furtherance of business or commerce. Explanation 1.- For the purposes of this sub-clause, "immovable property" includes- (i) building and par .....

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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) Land used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities." However, w.e.f. 01.07.2010, clause (V) was added to the definition of immovable property and it now covers vacant land given on le .....

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ement or contract between the lessor and the lessee that construction on such land is to be undertaken for furtherance of business or commerce during the tenure of the lease. The expression renting of immovable property is defined under Section-65(90a) which reads as follows:- "Renting, letting, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include:- i. renting of immovable property by a religious body .....

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n-II to this Section clarifies that for the removal of doubts, it is hereby declared that for the purpose of this clause, renting of immovable property" include allowing of permitting the use of space in an immovable property, Irrespective of the transfer of possession or control of the said immovable property". The Director General of Central Excise on the material evidence collected found that the assessee has shown income from leasing of vacant land for the purpose of construction o .....

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of ₹ 4,13,45830/- along with 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. 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 along with interest thereon under Section-75. Penalty of equal amount was imposed on the assessee under Section-78 of the Finance Act, 1994. Another pen .....

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rted that the assessee for the period between 01.06.2007 to 31.03.2012 had received a sum of ₹ 14,60,25,26,232/- under various heads from their customers/allotees on which service tax was payable and had not been paid. The quantum of service tax was calculated as ₹ 1,40,74,64,342/- along with interest. A second show cause notice dated 17.10.2012 was issued to the assessee for recovery of above mentioned amount. The assessee was also called upon to show-cause as to why penalty under S .....

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s also imposed under Section-77. Against the said order of the Commissioner, Appeal No. ST/59067/2013 was filed before the Tribunal buy the assessee. The Tribunal under the order impugned dated 28th August, 2014 has confirmed the demand of the service tax under the order in original dated 19th July, 2012 only for the normal period of limitation commencing from 01.07.2010 the amount whereof has been directed to be quantified by the Commissioner on remand. Penalty upon the assessee under Sections .....

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r stage to be used for furtherance of business or commerce;]" The excise appeal was admitted by the Court on following grounds: "(I) Whether the Tribunal has committed an error of law in holding that the renting of vacant land by way of lease or license (irrespective of the duration of tenure), for construction of building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 01.07.2010, and not so, earlier to this date? .....

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re has been no change in exclusion after insertion of clause (v) only signifies that clause (v) was already part of main definition? " Before adverting to the merits of this appeal it may be recorded that the appeal filed by the assessee before this Court, being Central Excise Appeal 54 of 2015, against the same order of the Tribunal dated 28.08.2014 has been dismissed by us under the judgment and order dated 30.03.2015 and the findings of the Tribunal under challenge in the said appeal, in .....

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other person in relation to renting of immovable property for use in the curse or furtherance of business or commerce." It is his case that the amendment carried out under the Finance Act of 2010 was only clarificatory in nature and vacant land other than that used for the agriculture, aquaculture, farming, forestry, animal husbandry, mining purpose was clearly defined to be under the purview of the service tax for the purposes of levy. The insertion of clause (v) under the Finance Act of .....

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n 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 building or a temporary structure, to be used at a later stage for furtherance of business or commerce, would be 'immovable property' and renting of this immovable property would be the taxable service, since 01.07.2010. 13. In view of clear exclusion of vacant land from the ambit of immovable prop .....

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the Act. The memorandum explaining the provisions in Finance Bill 2010 also indicates that the amendments are being made in the definition of 'renting of immovable property' service inter alia levy of service tax on renting of vacant land where there is an agreement between lessor and lessee for undertaking construction of building or structure on such land for furtherance of business or commerce during the tenure of the lease. The Board Circular No.334/2010-TRU, dated 26.2.2010 (in para .....

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