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TMI Blog2019 (2) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant had exclusive rights to undertake some of the functions like operating, maintaining, developing, designing, constructing, upgrading IGI Airport and to perform services relating to aeronautics and non aeronautics. It was their responsibility to adhere to Master Plan norms of the competent local authority and the land area utilized of non transfer assets not to exceed 5%, and to allow any development as per the Civil Aviation Security norms as per Para 2.2.4 of the said agreement which reads as under:- "2.2.4 It is expressly understood by the Parties that the JVC shall provide Non-Aeronautical Services at the Airport as above, provided however that the land area utilized for provision of Non-Transfer Assets shall not exceed five percent (or such different percentage as set forth) in the master plan norms of the competent local authority of Delhi, (as the same may change from time to time) of the total land area constituting the Demised Premises. Provided however that the Non-Transfer Assets, if any, that form part of the Carved-Out Assets and/ or situated upon the Existing Leases shall be taken into account while calculating the percentage of total land area utilized for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o various successful bidders by allocating and working out the same on the basis of Rs. 1,100/- per Sq Ft. of maximum gross built up area. The said Article 3 reads as below:- "3.1 Advance Development Cost 1.1.1 The Developer shall pay Dial, a sum of Rs. 1100/- (Rupees Eleven Hundred) per square foot of the Maximum GBA on Asset Area 3 in terms of Development Agreement being Rs. 80,30,00,000/- (Rupees eighty crores thirty lacs), as an advance towards development cost (the "Advance Development Cost"). The Parties agree that DIAL shall not have the right to escalate the Advance Development Cost for any reason whatsoever. 1.1.2 The Advance Development Cost shall be payable by the Developer to DIAL, in three tranches within one year from the date hereof. The Developer shall pay 50% of the Advance Development Cost to DIAL, concurrently with the execution of this Agreement ("First Tranche") in the manner specified herein. 1.1.3 25% of the Advance Development Cost, shall be payable within 6 months from the date hereof. The remaining 25% of the Advance Development Cost shall be payable by the Developer to DIAL, on or before the first anniversary of the date hereof. 1.1.4 Subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KW to Developer in Asset Area-3, thereafter Developer shall be responsible for internal distribution. (ii) water infrastructure and supply at Asset Area-3 at a single location, (iii) Road Network, including peripheral roads, however Developers shall be responsible for development of all internal roads within Asset Area-3 (iv) Fire Fighting, DIAL to be responsible for common storage tank external fire ring main and Hydrants at common area of Asset Area-3. Developer to be responsible for internal storage tanks and installation of fire detection and fighting system within Asset Area-3. (v) Storm Water Drain along the primary grid road whereas developer will construct internal storm water drains. (vi) Common Service Corridor (vii) Landscaping of common areas outside asset Area -3 (viii) Metro Station Facilities close to the Hospitality District (ix) 9 Meter corner areas to provide road junction Identical agreements were entered with different developers for common facilities. All such developers were paying advance development cost to DIAL with a condition to terminate agreement, in case of facilities not been provided and DIAL was required to compensate. All maintenance char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... „license of land acquisition of development right, there is exposure of service tax or VAT to such transaction as explained below:- Service Tax; As per service tax law there is no service tax on the right to use of land. Further, in the Budget 2007 a new taxable category of 'renting of immovable property' has been inserted which excludes 'vacant land' from its ambit. Therefore the activity of licensing of land by DAPL, to licensee would not be chargeable to service tax. Also, the activity of grant of development right is not covered under any taxable category of service. B. Whether advance received by DAPL from licensees towards development of basic common infrastructure facilities is taxable to service tax under service tax regulations? Given the background that the licensee would pay the advance to DAPL for development of common infrastructure facilities, such as roads, power, water and other infrastructure facilities which DAPL is obliged to develop in terms of its Development Agreement with the licensees, and which eventually would be used by the said licensees, it is relevant to examine the subject transaction for service tax exposure. The relevant taxable cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Finance Act, 1994 (refer annexure2 for definition) are any services provided by the airport authority or any other person authorized by it, in an airport or civil enclave. In the instant case DAPL has been given the right to manage the property which flows from the right given by AAI to DIAL and then by DIAL to DAPL. Further as per the definition these should be services provided in the airport. For this purpose it is required to be examined whether the common facilities are located inside the airport. The airport has not been directly defined under the service tax provisions. It is taken to have the sme meaning as is assigned to it by the Airport Authority Act, 1994, which while defining the term 'airport' uses the terms 'aerodrome' and 'aircraft' as defined in Aircraft Act, 1934. Following are the relevant definitions:- 'Airport' has the meaning assigned to it in clause(b) of Section 2 of the Airport Authority of India Act,1994 (Section 65 (3c) of the Finance Act, 1994) . 'Airport' means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in clause (2) of Section 2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeared to be located outside IGI Airport and License fee payable to DIAL was liable to tax. In another letter dated 02.12.2011, the Assistant Commissioner (Technical) stated that tax was required to be paid as 'Renting of Immovable Property' and not as 'Airport Service'. Another representation, as given in SCN, appears to have been made by M/s CAS Associates on 13/12/2011. Another representation was made by the appellant on 17.01.2012 on the same issue, however the Assistant Commissioner in response, vide letter dated 08.02.2012 opined that License Fee is taxable as Airport Service. Another Clarification was received from Dy. Commissioner, Service Tax on 02.05.2012 stating that on re-examination of issue the Department is of the view that the license fee is chargeable to service tax as renting of immovable property services. However, the matter has been referred to Board Office for confirmation. But, no confirmation from Board was received by the Appellants. It is claimed by the appellant that the Development Agreement was duly enclosed by M/s Aria Hotels, while seeking clarification from Chairman CBEC, vide letter dated 11.07.2011. Similarly, letter dated 17.07.2012 to Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed case records, oral and written submissions made and the case laws. 10. The issue before us is whether 'Advance Development Cost' received from Developers towards development of common infrastructure facilities, is covered under service category of 'Renting of Immovable Property Services' and whether extended period of limitation can be invoked in the facts and circumstances of the case. 10.1. The definition of renting of immovable property as contained in Section 65(105)(zzzz) is as follows: "Taxable services means any services provided or to be provided 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agencies. Therefore, even while allowing development rights to developers in allocated development area, as per norms and approved plans, for common areas, it had to perform supervisory role to develop facilities as per approved plans. Since it was the appellant's responsibility, as a privy to contract under OMD Agreement, to be responsible for operation management and development. In terms of the agreements such common facilities could not have been developed by any developer for everyone including members of public. Therefore, only the appellant was responsible to do the same. It is hard to equate, by any reasoning, development of common facilities with any leased or rental property and such common facilities were never the exclusive right of any developer. As per the Agreement the appellant had to recover such development cost of common facilities from the Developers, as the appellant was providing common facilities as well as plug in facilities in relation to road network, water, power supply, storm water drain etc. and the Developers could have their own internal developments to suit the requirement of their own development of Hotels etc. Further, as per the terms of IDSA no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be included for computing the service tax". 22.Section 66 of the Act is the charging Section which reads as under: "there shall be levy of tax (hereinafter referred to as the service tax) @ 12% of the value of taxable services referred to in sub-clauses of Section 65 and collected in such manner as may be prescribed.". 24.In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service, cannot form part of that valuation as that amount is not calculated for providing such 'taxable service'. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot just a series of statements, such as one finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-a-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to be fully executed and therefore the exact amount of remuneration, which was the difference in amount paid to the seller of land and average price decided in MoU, could not be finalized and therefore we feel that taxable value has not reached finality and therefore demanding service tax on the entire amount paid to the appellant for acquisition of land is not sustainable in law in view of the discussion in the preceding paras. Para 32. Further we find that the issue relates to interpretation, and there is no malafide on the part of the appellant. The transaction is duly recorded in the books of accounts maintained by the appellant. Further, there is no suppression of information from the revenue. Accordingly, we hold that the extended period of limitation is not applicable." 13. Reliance in this regard is also placed on the decision of this Tribunal Bench- Chennai, in the case of Commr. Of C.Ex. & S.T, Madurai Vs Sashwath Construction Pvt Ltd-2018 (10) GSTL 273 (Tri-Chennai) wherein it was held- Construction of Residential Complex Service,-Amount received by builder from allottees under category 'easement rights' for using certain common area-Taxability of-Order of autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction should be under any tenancy, lease, license or any other similar agreement arrangement, whereby an immovable property is given for use to the service recipient. It would be worthwhile to consider the meaning/ definitions of various words namely, rent, lease, license, etc, used in the definition of renting of immovable property. Dictionary meaning of various terms are extracted below; Renting It is act of letting out or allowing the use to another person. As per Black's Law Dictionary, Renting means usually fixed periodical return, especially, an agreed sum paid at fixed intervals by a person for any use of the property or car. The definition of 'lease' and 'license' as envisaged under Section 105 of Transfer of Property Act and Section 52 of the Indian Easement Act, respectively; Section 105 of Transfer of Property Act reads; "105. Lease Defined-A lease of immovable property is a transfer of right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or anything of value, to be rendered periodically or on specified occasions to the transferor by the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of a common sense rule of language. If a man tells his wife to go out and buy butter, milk, eggs and anything else she needs, he will not normally be understood to include in the term 'anything else she needs' a new hat or an item of furniture" The words used together should be understood as deriving colour and sense from each other. The rule of ejusdem generis is generally invoked where the scope and ambit of the general words which follow certain specific words (which have some common characteristics and constitute a genus) is required to be determined. By the application of this rule, the scope and ambit of general words which follow certain specific words constituting a genus, is restricted to things ejusdem generis, with those preceding them. To put it differently, the general expression has to be read to comprehend things of the same kind as those referred to by the preceding specific things, constituting a genus. Thus, as per the well known rule of interpretation namely, ejusdem generis, words of a general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified. In other words, the spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) the charges collected to undertake various municipal functions like Fire Services, Public amenities, public conveniences including street lightings, parking light, were in the nature of services to be provided by the municipalities and were liable to tax under Management Maintenance and Repair Services in respect of charges collected from allottees., even when within specified industrial area and not outside, it was regarded not as 'Renting of Immovable Property Service,' but as 'Management Maintenance and Repair Services'. Therefore, by no sense of imagination, the Common Area Services outside 'Asset Area' can be regarded as Renting of Immovable Property Services. Reliance in this regard is also placed on the matter of RICO LTD. VS. COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I-2018 (10) G. S. T. L. 92 (Tri. Del): 17. We find that there is no Service Provider-Service Recipient relationship between the appellant and the Developers, as regards the Advance development cost, because common facilities developed belong to none (held in trust) and the benefit is derived by all the 13 developers, as well as the public. Hence the same is not liable to Service Tax. It is also an undisputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te when licensing of vacant land was included in the renting of immovable services w.e.f 01.07.2010. Therefore, taxable event having occurred earlier to the point of levy of service tax, the same cannot be levied. Reliance is placed on: - (2000) 119 SCC 182 (SC), 20th Century Finance Corporation Ltd. and Anothers vs. State of Maharashtra. - 2009 (13) STR 159 (Tri. Bom): Bajaj Allianz General Insurance Co. Ltd. vs. CCE, Pune. 19. In any case the development of land or common facilities for commercial exploitation and usage by public cannot be termed as Renting of Immovable Property as it is the case of Land Development. Reliance in this regard is placed on 2015 (37) STR 859 (Tri. Del.) as confirmed in 2015 (040) STR J132 (S. C.) in the matter of Alokik Township Corporation Vs. Commissioner of Central Excise and Service Tax, Jaipur-I. (Para 7 and 7.1) :- In which matter construction of sewerage line, laying of underground water supply pipe line or of overhead water tank, construction of dividers and footpath along with plantation were clearly held as activities relating to land development. Number of activities performed in the instant case in relation to land like levelling of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts to keep Department in dark with deliberate intent to evade payment of Service tax, - Section 73 of Finance Act, 1994 not invocable. It is settled law that the element of 'intent to evade' is inbuilt in the expression 'suppression' - Reliance in this regard is also placed on 2006 (4) STR 583 (Tri. Bang.) in the matter of Elite Detective Pvt. Ltd. Vs. Commissioner, and Religare Securities Ltd. Vs. CST, Delhi as reported in 2014 (36) STR 937 (Tri. Del.): wherein it was held that- the suppression of fact has to be 'with intent to evade'. b. We note from the facts of the case that it was the appellant who had sought clarification from the Department regarding taxability or otherwise for various services provided by them. On 16.05.2011, Office of Commissioner gave interim reply, stating opinion was not final. On 18.11.2011 an Assistant Commissioner after visiting the site gave the opinion that tax was dischargeable as renting of immovable property. Again on 08.02.2012 an Assistant Commissioner opined that 'Licence Fee is taxable as Airport Service'. Lastly on 02.05.2012 Deputy Commissioner of Service Tax on re-examination gave opinion that the alleged service is taxable as renting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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