In case of let out co-owned property, SSI exemption available to each co-owner separately

CESTAT, AHMEDABAD BENCH

Dinesh K. Patwa

versus

Commissioner of Service Tax

ORDER NOS. S/1137-1141/WZB/AHD./2012

APPLICATION NOS. ST/S/1387-1391 OF 2011

APPEAL NOS. ST/598 – 602 OF 2011

JUNE 21, 2012

ORDER

M.V. Ravindran, Judicial Member  

All these five applications are filed for waiver of pre-deposit of amounts of service tax liability as indicated below, along with interest, penalty of equal amount under Section 78 and also the penalties under Section 76, 77, 70 of Finance Act, 1994.

2. Heard both sides and perused the record.

3.The issue involved in this case is regarding service tax liability on the above mentioned individuals as a provider of service under the category of renting out of immovable property.

4. Ld. Advocate on behalf of the appellants would submit that all the above individuals are co-owner of a particular building and have rented out the premises to a person, who issues different cheques to all the above individuals as they are co-owners. It is his submission that the amount received by the individuals would be within the threshold limit of SSI exemption as granted by Notification No. 6/2005-ST dated 01.03.2005 and amended vide Notification No. 08/2008-ST dated 01.3.2008. It is his submission that the Revenue has considered the amounts received by all of the applicants as collectively and seeking to charge the service tax liability individually on the persons.

5. Ld. SDR, on the other hand would submit that the property involved in this case is jointly owned by all the persons and the said property is being rented out and hence there is service of renting out of an immovable property. It his submission that for individual purposes, and for the purpose of benefit of individual co-owners, the appellants sought the payment individually. It is his submission that the department is correct in assessing the service tax liability after considering the amount collectively received by the individual appellant.

6. After considering the submissions made by both sides, we find that benefit of SSI exemption Notification No. 6/2005-ST dated 01.3.2005 as amended vide Notification No. 8/2008-ST dated 01.3.2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit.

7. Prima-facie, we find that the appellants have made out a case for waiver of pre-deposit of amounts involved. Accordingly, the applications for waiver of pre-deposit of amounts are allowed and recoveries thereof stayed till disposal of appeals.

NF