TMI Blog2017 (5) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the economic rent received by them from 01/07/2010, we find that on the similar matter, this Tribunal has examined this very same issue in the case of Greater Noida Industrial Development Authority [2015 (4) TMI 661 - ALLAHABAD HIGH COURT] and upheld the service tax liability on such charges. The said decision of the Tribunal has been upheld by the Hon’ble Allahabad High Court as noted earlier in this order. As such, we hold that the appellants are liable for service tax on the lease rent/economic rent received periodically, on the lands allotted for industrial purpose for the period post 01/07/2010. Management, maintenance and repair services - Held that: - repair and maintenance of roads is exempted from payment of service tax in terms of Section 97 of the Finance Act, 1994. The said exemption has been made applicable from 16/06/2005 upto 26/07/2009. Thereafter exemption Notification 24/2009-ST dated 27/07/2009 and Notification No. 54/2010-ST dated 21/12/2010 are applicable - any charges are collected by the appellants towards repair and maintenance of roads, the same shall not be liable to service tax under the category of management, maintenance and repair service. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appeals No.55531-55533, 59077-59079, 59310-59314, 59371-59379, 59439, 59649-59650 of 2013, Service Tax Appeals No.51503-51507 of 2014, Service Tax Appeals No.51568, 51604, 51812-51813, 51834, 51911, 52049-52050, 55835 of 2014 and 50375, 50502, 50603-50605, 50667, 50673-50674, 50751, 50784, 50901, 50954-50955, 53498-53499, 53526, 54380 of 2015 Service Tax Appeals No.50291, 52173-52174, 52176, 52625-52627, 52892, 52699 and 53010 of 2016 ORDER Per: B. Ravichandran These are 69 appeals filed by the appellant involving identical set of facts and covering the dispute of service tax liability on various charges collected by the appellant from the allottees of land. All these appeals are taken up together for disposal. 2. Briefly stated, the appellants are a company incorporated by the Government of Rajasthan under Companies Act, 1956. They are promoted and fully subscribed by the Government of Rajasthan and are engaged in development of industrial areas, export promotion parks, growth centres, SEZ etc. The appellant are registered with Service Tax department under the category of Management, Maintenance and Repair Service and Renting of Immovable Property Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Restoration Charges Oct. 2008 to June, 2012 Renting of Immovable Property service. 6. Unauthorized Construction Charges/ Regularization Charges. Oct. 2008 to January, 2013. Renting of Immovable Property service. 7. Transfer Charges. 01/10/2004 31/01/15 Real Estate Agent service/Renting of Immovable Property service. 4. When the cases were listed for hearing, the learned Counsel for the appellant submitted that there is a delay of 35 days in filing the appeal No. ST/53010/2016 DB. Having examined the miscellaneous application for condonation of delay we are satisfied that the reason for delay has been satisfactorily explained and accordingly we condone the delay and allow the miscellaneous application. The said appeal also is taken up alongwith appeals listed on similar issue. 5. The learned Counsel appearing on behalf of the appellant submitted, elaborately, against the findings of the lower authorities on the liability of the appellant for ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons :- (i) the appellant is performing statutory municipal function and are not covered for service tax liability. Appellant is a Government authority entrusted with some of the municipal functions under Article 243W of the Constitution of India. Notification 25/2012-ST dated 20/06/2012 exempts various services provided by a Government authority. Further reliance was placed on the clarification dated 10/01/2017 issued by the Ministry of Finance to the CMD of the appellant. The Ministry categorically clarified that the appellant shall be eligible for exemption from service tax under Notification No.25/2012-ST w.e.f. 30/01/2014 ; (ii) the retention charges, restoration charges and regularization of unauthorized construction charges are to be considered as penal charges and not as consideration. Retention charges is collected for failure to construct/commence commercial production within specified period. Restoration charges are collected for restoration of plot after such failure. Similarly, the regularization charges have no nexus to any service provided by the appellant ; (iii) transfer charges cannot be taxed under the category Real Estate Agent Service . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment at the time of initial allotment and thereafter on a periodical basis, a lease rent is also paid. It is not tenable to hold that lump sum payment called premium or salami is towards sale of land and the periodical payment is towards lease rent of the land. Such interpretation will be selfcontradictory as one cannot collect rent on a sold land. 7. The learned AR specifically contested the findings of the Tribunal in Greater Noida Industrial Development Authority (supra) as recorded in para 10.1 of the order. He submitted that having recorded that the consideration may be either premium or rent or both, for lease transaction, the Tribunal referred to the decision of Hon ble Supreme Court in Panbari Tea Company Ltd. 1965 (3) SCR (811) to distinguish between premium and rent. It was recorded that the premium or salami is towards a price for parting with the interest on land and the periodical payment is in the nature of rent. The former is a capital income and a latter is revenue receipt. The premium is a price paid for obtaining the lease of an immovable property. The learned AR submitted that the treatment of Income Tax Act with reference to various types of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxed 2015 (40) S.T.R. 46 (All.). 11. When these appeals were again heard on 26/04/2017, the learned Counsel for the appellant submitted that Section 104 of Finance Act, 1994 was inserted w.e.f. 31/03/2017. In view of the new statutory development brought in by this section, the appellants are not liable to pay service tax in respect of consideration received as one time upfront amount [premium, cost, development charge etc.] for grant of long term lease of 30 years or more of industrial plots. The exemption has been made applicable from 01/06/2007 to 21/09/2016. Notification 41/2016- ST was issued on 22/09/2016, for exemption of the said consideration, from that date. Accordingly, the learned Counsel submitted that more than 90% of the demand against the appellant is not sustainable. Regarding the tax liability of economic rent received periodically as well as other charges the learned Counsel reiterated their submission already made during the course of argument as well as in the written submission. 12. The learned AR also stated that the introduction of new Section 104 in Finance Act, 1994 through an amendment by Finance Act, 2017 extended the relief to the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , warehouses, theatres, exhibition halls and multiple-use buildings;] [Explanation 2. - For the removal of doubts, it is hereby declared that for the purposes of this clause 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;] Section 65 (105) (zzzz) of Finance Act, 1994 [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, [(v) vacant land, given on lease or license for construction of building or te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. - For the purposes of this section, - (a) [ consideration includes - (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is like charging of one time rent and then rebate is given for the yearly rent to be paid. Premium is also part of the lease money. Therefore, the entire transaction both premium and rent are amenable to service tax and service tax will have to be paid on the same. 6. Another submission has been made by Mr. Bhattacharji, that this premium includes capital investment. We do not understand what is the meaning of this argument? It is true that the payment of premium will be treated as a capital investment but this does not mean that it is not the consideration for the lease . 16. In view of the legal position as explained above by the Hon ble Tripura High Court, we find that the appellants are liable to service tax on the premium received on leasing of land for the periods of less than 30 years. 17. Regarding tax liability of the appellant on the economic rent received by them from 01/07/2010, we find that on the similar matter, this Tribunal has examined this very same issue in the case of Greater Noida Industrial Development Authority (supra) and upheld the service tax liability on such charges. The said decision of the Tribunal has been upheld by the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges. Though under different names, these are attributable to the lease arrangement of plot between the appellant and the allottees and we have no hesitation to hold that these are considerations received for allowing the allottee to use the plot and they have direct nexus to the service of renting of immovable property by the appellant. As such, these charges are also liable to be taxed under the said tax entry. 20. We have examined the decision of the Tribunal in Religare Securities Ltd. vs. CST, Delhi reported in 2014 (36) S.T.R. 937 (Tri. Del.), which is relied upon by the appellant. We find that the said decision is with reference to delayed payment charges collected by stock broker from their clients. We find the facts of the said case have no application to the present situation. As explained earlier, these charges are all having direct nexus to the service of renting of industrial plot by the appellant. The continued enjoyment of lease property is closely linked to the above considerations and, as such, we find the appellants are liable to service tax on the same. 21. The appellants also collected service charges/fire charges from the allottees of the plot. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 20/06/2012 as the said entry was substituted w.e.f. 30/01/2014, by Notification 2/2014-ST dated 30/01/2014. The substituted definition changed the scope of governmental authority to include any authority or any other body established by Government, with 90% or more participation by way of equity or control, to carry out any function interested to municipality under Article 243W of the Constitution. We have perused Article 243W of the Constitution. It empowers legislature of a state by law endow the municipalities with such powers and authority as has been necessary to enable them to function as institution of self-Government. The said Article provides for empowering committees to carry out the responsibilities including those listed in 12th Schedule. We have perused letter dated 21/01/2015 of Principal Secretary, Government of Rajasthan, Local self- Government Department. It is clarified therein that the appellant are carrying out municipal function in their industrial areas as laid down in the Municipal Act, 2009 and the municipal body of the concerned area does not undertake such work in the industrial areas falling under the jurisdiction of the appellant. The matter was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as a taxable value received for rendering taxable service of renting of immovable property. Wherever demand of service tax on this income is with reference to this tax entry, the appellant is liable to pay. 24. The appellants contested the demands, wherever issued invoking extended period of limitation. We note that the appellants are a Government company. The issues dealt with above are involving interpretation of legal provisions. Some differing views are already on record. As a Government agency it is not incorrect to assume that the appellant did not have any malafide intend to mis-represent or suppress facts from the tax authorities in order to evade the tax. They were registered with the Department and were discharging service tax under various categories. Renting of immovable property service introduced w.e.f. 2007, had been put to several judicial tests. In fact, the Hon ble Delhi High Court in the case of Home Solutions Retail Ltd. vs. Union of India reported in 2011 (21) S.T.R. 109 (Del.) held that renting per-se is not a taxable service. Service in relation to renting only can be subjected to service tax. It led to statutory amendments, including ..... X X X X Extracts X X X X X X X X Extracts X X X X
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