Leasing of Tech Park Premises Taxable as Renting, Not Business Support: CESTAT Bangalore

Electronics Technology Parks Vs C.C. C.E.& S.T (CESTAT Bangalore)

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, disposed of cross appeals filed by the assessee and the Department against the Commissioner’s order concerning service tax demands raised on Electronics Technology Parks, a Government of Kerala company established to develop and manage Electronic Technology Parks in the State. The Commissioner had confirmed service tax demands under the categories of Business Support Service, Renting of Immovable Property Service, Sale of Space or Time for Advertisement Service and Tour Operator Service, disallowed part of the CENVAT credit, imposed interest and penalties, and dropped certain demands. The Department appealed against the dropped demand while the assessee challenged the confirmed demands.

The principal issue before the Tribunal was whether the services provided by the assessee were correctly classifiable as “Support Services of Business or Commerce” or as “Renting of Immovable Property Service.” The assessee contended that it merely leased developed land and buildings and supplied electricity, water, air-conditioning and other facilities incidental to renting. It also submitted that electricity and water constituted sale of goods, that independent entities such as Technopark Business Incubation Centre (TBIC) and Technopark Software Engineering Competency Centre (TSECC) were separate organisations, and that their activities could not alter the character of the assessee’s renting transactions.