Service Tax Payable On Renting/Leasing Shops, Premises, Buildings, Etc. For Any Commercial Purpose Except Agriculture: CESTAT

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is payable on renting or leasing shops, premises, buildings, etc. for any commercial purpose except agriculture.

The bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed with respect to shops, premises, buildings, etc. rented or leased out for any other commercial purpose other than with reference to agricultural produce (like a bank general shop, etc.), the same shall not be covered by the negative list, and the appellants shall be liable to service tax.”

The appellant/assessee, Nagar Parishad, Chittorgarh, is engaged in providing a service, namely ‘Renting of Immovable Property Services.’ It came to the notice of the department that local authorities, like the appellant, are not paying service tax in respect of the charges collected under various heads, which are covered under Renting of Immovable Property.

Hence, the appellant was asked to provide the details of the amount being received by them during the period 2008–09 to 2012–13. From the examination of the information and documents provided by the appellant, the department noticed that the appellant had received payouts on account of the transfer fee, forfeit charges, tamir ijazat, annual lease, rent of shops, and other rent.

As such, the appellant was observed to be liable to pay the service tax. Consequently, the amount was proposed to be recovered. The proposal has been confirmed.

The tribunal found that any reasonable cause with the appellant justifying the non-payment of service tax on the income that was being received for a long period of 5 to 6 years from renting immovable properties, as well as the amount of service tax as confirmed against the appellant, was not paid along with the interest in full within the stipulated time.

Counsel For Appellant: None

Counsel For Respondent: Harshvardhan

Case Title: M/s. Nagar Parishad Versus Commissioner of Central Excise & C.G.ST – Udaipur

Case No.: Service Tax Appeal No. 50002 of 2016 [DB]

Click Here To Read The Order