Bhilai Steel Plant Vs Commissioner of Central Excise (CESTAT Delhi)
The appeal challenged an Order-in-Original dated 30.08.2013 whereby the Commissioner demanded service tax of ₹84,16,343 for the period 2007-08 to 2011-12 on consideration received from leasing land to a joint venture company. The amount of ₹3,26,080 already paid by the appellant was appropriated in the order.
Background of the dispute: The appellant, a subsidiary of Steel Authority of India Limited engaged in manufacturing iron and steel products, generated blast furnace slag, which could be used for manufacturing cement. It entered into a joint venture with another company and formed Bhilai JVC Cement Limited (BJCL). Under the arrangement, the appellant leased 34.59 acres of vacant land to BJCL for 30 years through a long-term lease and supplementary lease deed, and separately licensed certain buildings for office use. The appellant paid service tax on the licence fee received for the office buildings under the category of Renting of Immovable Property Service. The dispute related only to the consideration received for leasing the vacant land.
Dispute regarding the tax period: The appellant accepted service tax liability from 01.07.2010 onwards because of an amendment to Section 65(105)(zzzz) of the Finance Act, 1994, which specifically brought within the tax net vacant land leased or licensed for construction of a building or temporary structure to be used for business or commerce. However, it disputed the levy of service tax for the period prior to 01.07.2010, contending that vacant land was not taxable under the unamended provision.
