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Maturu Panchakshari Versus CC, CE & ST, Guntur

Validity of SCN - Service on partners instead of firm - Held that: - the rent is received by the Partnership Firm, viz; M/s Satyanarayana Paddy Boiled Unit (SPBU). The property is owned by them and property tax is also paid in the name of the unit. The premises was given for lease for sole use as auction platform for tobacco growers to enable them to get better price for their produce. The service provider here is M/s SPBU and not the individual partner. Therefore, the show cause notice/demand r .....

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Commissioner (Appeals) who upheld the confirmation of service tax on renting of immovable property. 2. The appellant, Maturu Panchakshari is the legal hier of Sh. Venkateswara Rao who was the Managing Partner of Sri Satyanaryana Paddy Boiled Unit (SPBU) a partnership firm which had four partners. In the year 1983, the firm purchased property and property tax was also paid by firm. In 2008, the property was leased out to M/s Tobacco Board by the firm. The agreement is with the firm. The rent was .....

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g Partner) of the firm. He died during the proceedings and his legal hier Sri. Maturu Panchakshari has filed the appeal. That instead of issuing the notice in the name of the firm the Department has issued notice demanding service tax on renting of immovable property in the name of Sri M. Venkateswara Rao who was the Managing Partner of Satyanarayana Paddy Boiled Unit. He relied upon the judgment in the case of Nityanand Nirmal Vs. Collector of C. Ex., Indore [1999 (109) E.L.T. 522 (Tribunal)], .....

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However, the Department has issued notice of demand for service tax against one partner. Under Section 3(42) of General Clauses Act person shall include any company or association, body or individuals, whether incorporated or not. It would thus include charitable trust, partnership firm, or any other organization which has separate rights. Section 65B(37) of the Finance Act defines person as person includes an individual, a Hindu Undivided Family, a company, a society, a limited liability par .....

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them to get better price for their produce. The service provider here is M/s SPBU and not the individual partner. Therefore, the show cause notice/demand raised against one partner/Managing Partner is non est in law. An analogous issue was analysed in the case Hindustan Foam Industry Vs. CCE, [1990 (48) ELT 33 (Tri.)]. The discussion is worth reproducing as under: 8. We have gone through the arguments and perused the records. On facts, it is true the show cause notice dated 30.08.1976 which is .....

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short payment of duty as the appellant firm is a manufacturer of the product. But it is strange that the firm was not served with the notice but the partners. The term Person has not been defined in the Central Excises and Salt Act, 1944. In the absence of definition of the term Person in the Excise Act, the term has to be understood as used in legal terminology which includes individual, firm, Society, Club, Association of person, etc. Excise duty is leviable on the excisable goods manufac .....

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