TMI Blog2015 (4) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... ubjected to Service Tax does not appeal to us - Suffice is to mention that the Finance Act, 1994 makes no distinction between a statutory body i.e. a juristic person and an individual. If a sovereign/public authority provides a services, which is not in the nature of an statutory activity and the same is undertaken for a consideration (not a statutory fee), then in such cases, Service Tax would be leviable as long as the activity undertaken falls within the scope of a taxable service as defined. 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 - such activity of leasing do constitute a taxable service. Appeal dismissed - decided against appellant. - CEA No. 54 of 2015 - - - Dated:- 10-4-2015 - Arun Tandon and Dr. Satish Chandra, JJ. Shri Chandra Kumar Rai and J.K. Mittal, for the Appellant. Shri Ashok Singh, Senior Standing Counsel, for the Respondent. ORDER Heard Sri J.K. Mittal assisted by Sri Chandra Kumar Rai on behalf of appellant and Sri Ashok Singh on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5. However, w.e.f. 1-7-2010, clause (V) was added to the definition of immovable property and it now covers vacant land given on lease or licence for construction of a building or temporary structure at a later stage, to be used for furtherance of business or commerce. A notification was issued by the Research Unit of Central Board of Excise Customs (Department of Revenue) dated 26-2-2010 whereunder it was clarified that suitable amendment in the definition of taxable service relating to renting of immovable property is being made so as to provide that tax would be charged on rent of a vacant land if there is an agreement 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 lese. 6. The expression renting of immovable property is defined under Section-65(90a) which reads as follows :- Renting, letting, licensing or other simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e documents. 9. Against the above order of the Commissioner, Appeal No. ST/3256/12 was filed before the Tribunal. 10. A second show cause notice was issued to the appellant on the basis of the enquiry conducted by the Additional Director General, DGCEI, New Delhi dated 17-10-2012, it was reported that the appellant for the period between 1-6-2007 to 31-3-2012 had received a sum of ₹ 14,60,25,26,232/- under various heads from their customers/allottees on which Service Tax was payable and had not been paid. The quantum of Service Tax was calculated as ₹ 1,40,74,64,342/- alongwith interest. 11. A second show cause notice dated 17-10-2012 was issued to the appellant for recovery of abovementioned amount. The appellant was also called upon to show cause as to why penalty under Sections-76, 77 78 of the Finance Act, 1994 be not imposed. 12. This show cause notice was adjudicated by the Commissioner, Central Excise and Service Tax, Noida vide order-in-original dated 30-4-2013. He confirmed the demand of Service Tax of ₹ 1,40,74,64,342/- against the appellant under proviso to Section 73(1) of the Finance Act along with interest. Penalty of equal amount under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance sheet? 16. The applicant-appellant has also prayed for framing of additional substantial question of law, which reads as follows : Whether demand for the normal period can be confirmed under sub-section (1) of Section 73 when the demand was raised in SCNs on the allegation of ingredients under the proviso to sub-section (1) of Section 73, when it is held that allegation of ingredients under the proviso to sub-section (1) of Section 73 do not exist? 17. Learned counsel for the appellant vehementally submitted before us that the activities assigned to the assessee were sovereign/public/statutory duties. It is their case that the long term lease of vacant land for 90 years or lease in perpetuity of vacant land was not taxable under Section 65(105)(zzzz) of the Finance Act, 1994 specifically in the circumstance when the Tribunal itself has come to a conclusion that the premium charged for such lease will not be taken into consideration for the purposes of determining the tax liability. It is their case that transactions cannot be held to be taxable for one part and not for the other. It is further contended that the second show cause notice dated 17th October, 2012 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the assessee deals with the transfer of property within the meaning of Section 12-B of the Income Tax Act and is, therefore, clearly distinguishable in the facts of the case. 23. The Tribunal appears to be justified in recording that the letting of vacant land by way of lease or license irrespective of the duration or tenure for construction of building or temporary construction for use in the course or furtherance of business or commerce is taxable w.e.f. 1st July, 2010 in view of Clause (v) of Explanation 1 to Section 65(105)(zzzz) of the Finance Act, 1994. 24. So 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. 25. The word lease as contemplated by the Transfer of Property Act, vis-a-vis license has been explained by the Apex Court in the case of Associated Hotels of India Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal under the order impugned has already remanded the matter to the Commissioner to examine the challenge to the second show cause notice by de novo proceeding and to given a specific finding on the plea of overlapping raised by the assessee. 30. It is left open to the appellant to raise all such legal as well as factual issues in respect of the second show cause notice dated 17th October, 2012 during remand de novo proceedings. The plea of the appellant that it is performing statutory duties and is a creation of a statute and therefore cannot be subjected to Service Tax does not appeal to us. Suffice is to mention that the Finance Act, 1994 makes no distinction between a statutory body i.e. a juristic person and an individual. 31. As far as the circular dated 23rd August, 2007 issued by the Government of India, which has been so heavily relied upon by the appellant is concerned, we may record that under Clause 032.01, it has been provided that the Prasar Bharati Corporation (Doordarshan and All India Radio), which has been constituted under the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 is liable to pay Service Tax for broadcasting services. 32. Simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [(1988) 3 SCC 594], (4) Maharaja Chintamani Saran Naty Sah Deo v. CIT (AIR 1961 SC 732), and (5) Associated Hotels of India Ltd. v. R.N. Kapoor (1959 AIR SC 12262) do not lay down anything contrary to what has been recorded by us herein above. 36. We may not enter into the issue as to whether premium paid along with rent fixed should form the total consideration for levy of Service Tax or not as no appeal has been filed by the Department against the order of the Tribunal. But at the same time if the Tribunal has held that only rent charged be considered for computation of Service Tax, it will not mean that the Tribunal has held that a part of the same transaction was taxable and part of it as not taxable. In our opinion, the Tribunal has rightly held that the lease of open land for use as commercial/business purpose, as an taxable event, but what amount is to be taken into consideration for computation of Service Tax has been confined to the periodical rent only. The plea raised to the contrary by the learned counsel for the appellant has therefore, to be rejected. 37. For the reasons recorded above, the questions as raised by means of the present excise appeal are an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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