Custom, Excise & Service Tax Tribunal
Anil Saini vs Cce, Chandigarh-I on 5 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH-160017
DIVISION BENCH
COURT NO.1
Appeal No. ST/60370,60371,60372,60374,
60379,60380,60382/2016
[Arising out of the Order-in-Appeal No. CHD-EXCUS-001-APP-148 to 155-2015-2016 dated 29.02.2016 passed by the CCE (Appeals), Chandigarh]
Date of Hearing/Decision: 05.12.2016
For Approval & signature:
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. Devender Singh, Member (Technical)
Anil Saini
Kabal Singh
Neelam Saini
Surinder Kaur
Jaswinder Singh
Parmod Kumar Chaudhary
Sukhjeet Jodha Appellants
Vs.
CCE, Chandigarh-I Respondent
Appearance:
Sh. Rajnish Dhami, Advocate- for the appellant Sh. R.K Sharma, AR- for the respondent Coram:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Final Order No : 61723-61729 / 2016 Per Ashok Jindal:
The appellants are in appeal against the impugned order wherein the demand of service tax has been confirmed under the category of Renting of Immovable Property Services. All the appeals are arising for the common order and the issue involved in all these appeals is common, therefore, all the appeals are taken up together for disposal by common order.
2. The brief facts of the case are that all the appellants are co-owners of the property SCO-43-44, Sector-8-C, Chandigarh. They let out the said property on rent and received the rent separately as per their share in the property hence, did not pay service tax on the amount of rent received as the amount of rent was within the threshold limit and they were entitled to avail benefit of Notification No. 06/2005-ST dated 01.03.2005. If the threshold limit of the services provided by the assessee less than Rs. 10 Lakhs therefore, the assessee are not liable to pay services. The Revenue of the view is that as the appellants have jointly let out the property and total rent received on the property is more than threshold limit of Notification No. 06/2005-ST dated 01.03.2005 ibid, therefore, the appellants are liable to pay service under the category of Renting of Immovable Property Services. In these set of facts, the proceedings were initiated against the appellants and consequently the by adjudication, the demand of service tax along with interest was confirmed and penalties on all the appellants are imposed. Aggrieved from the said order, the appellants are before us.
3. After hearing both the sides, considering the fact that the issue has already been dealt by this Tribunal in the case of CCE, Nasik Vs. Deoram Vishrambhai Patel reported in 2015 (40) STR 1146 (Tri. Mumbai) wherein this Tribunal observed as under:
6. We have considered the submissions made by both sides and perused the records. The issue that needs to be decided in this case is whether the respondent and his brothers are to be treated as association of persons or other vise and service tax liability on it arises, should be confined without the benefit of the notification No. 6/2005-S.T.
7. It is undisputed that the property which has been rented out by the respondent and his brothers is jointly owned property; service tax liability arises on such renting of property.
8. On deeper perusal of impugned order, we find that the first appellate authority has considered all the angles in the dispute and came to the correct conclusion. The findings of first appellate authority is as under.
6.2 On mere reading of the Order-in-Original, it is evident that the adjudicating officer has considered above named four persons as one person for determining tax liability and imposition of penalties without telling any legal basis for doing so. The appellants have contested the Order in Original mainly on the grounds that rented property belongs to four separate persons (all brothers) but the service tax has been demanded wrongly by the department from the appellants by clubbing the rent received by all the co-owners and, therefore, the demand off tax is not maintainable on this ground alone. In support they have produced a City survey Extract as evidence regarding ownership of the rented property which shows that the said property was purchased in 2003 and is owned jointly by all the four co-owners. Further, the lease agreements with M/s Max New York Life Insurance co. Ltd., Oriental bank of Commerce, Axis Bank, Kotak Mahindra Bank and HDFC Standar Life Insurance Ltd. are also entered into by the appellants in their individual capacity, as per SCN also, all four co-owners have obtained separate Registration Certificate on 10.04.2012 and all the four co-owners individually paid their service tax liability along with interest on 14.02.2012. Thus, the ownership of the Property and providing of taxable renting of immovable Property by the four appellants in this case is in their individual capacity and, therefore, their tax liability should have been determined by considering their individual rental receipts and not collective one. From the various lease agreements made with above mentioned Commercial firms, it cannot be disputed that monthly rent was paid by the above named concerns to each appellant after deducting tax at their end.
6.3 From the show cause notice dated 19.10.2012, it is evident that the appellants had received rent as detailed below:-
Sr. No Period Amount(Rs.)
1.
2007-08 (1-6-2007 to 31-03-2008) Rs. 29,21,048/-
2. 2008-09 Rs. 36,27,024/-
3. 2009-10 Rs. 46,72,744/-
4. 2010-11 Rs. 52,63,304/-
5. 2011-12 Rs. 44,28,360/-
But as the rent was distributed equally among each of the appellant, it is evident that each of them received an amount lesser than Rs. 8 lakhs and 10 lakhs in the years 2007-08 and 2008-09 respectively which is below the exemption limit of eight lakhs and ten lakhs during the relevant period. The appellants were, therefore, not liable to pay service tax on the amounts received by them during these two years by virtue of Notification No. 6/2005-S.T., dated 01.03.2005. The appellants case is also supported by the Tribunals decision in the case of Dinesh K. Patwa V. CST, Ahmedabed which is referred in para 3(ii) above. However, in the Financial Year 2009-10 and 2010-22, the receipt off rent by each appellant exceeded the statutory exemption limit of Rs. 10 lakhs and the appellants have paid service tax along with interest on their own before receipt of SCN. This fact is not disputed by the department also and no additional tax liability has been worked out for the said period in OIO.
6.4 Since the appellants were individually liable to pay service tax and eligible for the exemption under general exemption Notifiation 6/2005-S.T., dated 1.03.2005 during the period 2007-08 and 2008-09 , no service tax was payable during the said period. Hence, the question of penalty under Section 76 for the said period does not arise. For the subsequent period i.e. 2009-10 & 2010-11, the appellants have already accepted their tax liability and paid Service tax along with interest on 14.02.2012. the said payment of service tax is certainly a delayed payment, but was made by the appellants on their own when they realized that their taxable value for renting of property had exceeded the exemption limit of Rs. 10 Lakhs. The adjudicating authority has claimed in his order that the appellants paid service tax only after Department started investigation, but is not supported by any evidence or the facts on record. The SCN or the OIO do not talk of any audit objection or Preventive action or any inspection etc. on the basis of which not payment of service tax by the appellants was pointed out. Instead in the SCN, one statement of Shri Chandulal Vishrambhai Patel is only referred to which was recorded 22.02.2012 which is 8 days after the appellants had paid service tax along with interest on their own. Thus, the claim of the appellant that they had paid service tax for the years 2009-10 and 2010-11 on their own initiative and there was no suppression of facts etc. on their part with any intention of evade service tax cannot be denied. Considering all these facts, I agree with the appellants contention that this case was squarely covered under sub-section (3) of Section 73 which provided not to issue any notice under sub-section (1) of Section 73 if the service tax not levied or paid was paid along with interest by the person concerned before service of notice on him and informed the Central Excise Officer of such payment in writing. Further in Explanation 2 of the said sub section it is also clearly provided that no penalty under any of the provisions of the Act or the rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon. Hence, in fact no SCN was required to be issued in this case for recovery of service tax and imposition of penalty and even when it has been issued, no penalty under Section 76 or 78 is imposable in this case for the period 2009-10 and 2010-11.
9. It can be seen from the above reproduced findings of the first appellate authority, the conclusion arrived at is very correct, as co-owners of the property cannot be considered as liable for a Service Tax jointly or severally as Revenue has took identify the service provider and the service recipient for imposing service tax liability, which in this case, we find our individual. The conclusion arrived at by the first appellate authority is correct and he has confirmed the demand raised on the respondents by extending the benefit of Notification No. 6/2005-S.T. We do not find any reason to interfere in such a detailed order.
4. We further take note to the fact that for the subsequent period the appellants have been granted the benefit of the Notification No. 06/2005-ST dated 01.03.2005 ibid.
5. In that circumstances, we hold that the demand of service tax is not sustainable as the appellants are entitled for benefit of Notification No. 06/2005-ST dated 01.03.2005 ibid, therefore, the impugned orders are set aside. The appeals are allowed with consequential relief, if any.
(Dictated and pronounced in the open court)
Devender Singh Ashok Jindal
Member (Technical) Member (Judicial)
rt
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ST/60370,600371,60372,60374,60379,60380,60382/2016
Anil Saini & Others Vs. CCE, Chandigarh-I