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TMI Blog2019 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.10.2012 Selling of space on the hoardings for Advertising 5,87,30,281 01.05.2006 to 30.09.2011 ST/28153/2013 No.118/2012 Dt.09.10.2012 Renting of Immovable Property Services and parking facilities 3,07,24,395 01.06.2007 to 31.12.2010 ST/28154/2013 No.137/2012 Dt.26.10.2012 Renting of Immovable Property 95,02,045 -do- ST/28166/2013 No.148/2012 Dt.09.10.2012 -do- 1,15,14,708 -do- 2. Learned counsel for the appellants submits that the Appellant is a local body created under the constitutional provisions i.e under 74th Constitutional amendment PART IXA Article 243P; the terms municipality means local area declared by the Municipality and it is governed by its own elected council of government body of such town or city; The Nature of services provided by the appellants include Renting of Space or Time for Advertisement services; Renting of its premises like Garuda Mall; renting parking space etc. 2.1. Regarding the service alleged to have been rendered in respect of lending space for advertisement, he submits that Service Tax Department had inspected the business premises and had opined that the collection of LICENCE FEE is nothing but providing the Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has resulted in not furnishing the correct bifurcation figures. As such one more opportunity of being heard may be provided to the Appellant to put forth their case before the Respondent to meet the ends of justice. 2.3. Learned Counsel further submits that there was confusion regarding the payment of Service tax after the Delhi High Court judgment and the Appellant was also under an impression that as the Corporation is as creature of Constitution as engaged in developing the Urban infrastructure as such paid the tax or nor get it registered as such in view of the above penalty levied may be set aside. As far as penalty is concerned, they rely upon the judgment of the CESTAT - NEW DELHI in the case Jingal Vegetable Products vs CCE, 2013 (60 VST 525 wherein it was held, inter alia, that the appellant cannot be accused of suppressing the relevant information from the Department as during the period of dispute there was doubt about the levy of service on the renting of immovable property till the dispute was put to an end by retrospective amendment and that longer limitation period under proviso to section 73(1) would not applicable and thus, penalty u/s 78 of the Finance Act also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in contention of appellants is that the levy of Service Tax on the Renting of Immovable Property by the Centre is unconstitutional; appellants have taken pains to explain that Renting of Immovable Property is not service but goods and that the levy on the same is a State subject. Learned AR submits that the validity of tax was upheld by various High Courts holding that The imposition of service tax under Section 65(105)(zzzz) read with Section 66 is not a tax on land and building which is under Entry 49 of List II; What is being taxed is an activity, and the activity denotes the letting or leasing with a purpose, and the purpose is fundamentally for commercial or business purpose and its furtherance. The concept has to be read in conjunction. As we have explained that service tax is associated with value addition as evolved by the judgments of the Apex Court, the submission that the base of the said decisions cannot be taken away by a statutory amendment need not be adverted to. Once there is a value addition and the element of service is involved, in conceptual essentiality, service tax gets attracted and the impost gets out of the purview of Entry 49 of List II of the Seventh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty taken on rent if used for business or commerce purposes is prima facie liable to Service Tax on the rental income. In the present case we notice that out of total income of Rs. 8,42,40,810/- during the period 2007-08 to 2009-10 the monthly parking income amounting to Rs. 22,51,755/- only pertains to those clients who are having shops in the mall and similarly out of total income parking of Rs. 3,88,45,204/- in year 2010-11 amount of Rs. 9,63,645/- only pertains to the monthly parking income in respect of parking space provided to the shop owners. We, therefore, are of prima facie view that Service Tax is payable on this parking income pertaining to the parking service provided to shop owners who own shops in the mall. Learned AR submits that the appellant has not staked the claim of exemption from parking rent during the adjudication proceedings. Moreover, there is no break-up of the parking rent derived from the shop owners in the Garuda Mall (which amounts to rent for the furtherance of business) and the rent received from visitors and shoppers, so as to claim relief under the clause (iv) (c) of the Explanation 1 to the definition of the classification of services from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing heard may be provided to the Appellant to put forth their case before the Respondent to meet the ends of justice. 8. We find that the argument of the AR for Revenue, with regard to renting of immovable property is acceptable. We find that the constitutional validity of the same is upheld by Delhi High Court in the case of Home solutions retails (India) Ltd (supra). Madras High Court has upheld the applicability of the same to Municipalities in the case of Tenkasi Municipality (supra). There is dispute regarding the quantification of duty and the nature of renting of immovable property and leasing out/sale of space for advertising as to whether are not for the purposes of furtherance of business interest or otherwise. While the appellants contend that they have not been given enough opportunity to explain, the department contends that no proper bifurcation was given. The appellants submitted that vide letter, dated 24/7/12, they have requested that four weeks' time to file their submissions. Oder was passed on 30/8/2012 before they submitted their records. It is not forthcoming from the OIO whether the appellants were put to sufficient notice before finalisation. This is certai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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