The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax on letting out shops and other premises for shops, canteen, and banks is applicable on Krishi Utpadan Mandi Samiti.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that as per Notification No.33/2012-ST dated 20.06.2012 the appellant is claiming exemption it is mandatory to follow the conditions for evaluating the threshold limit by arriving at the “aggregate value” of one or more taxable services provided by the service provider from one or more of the premises and not separately for each premises or each services.
Table of Contents
Background
The appellant/assessee Krishi Utpadan Mandi Samiti has challenged the Order confirming the demand for the period 2009-10 to 2014-15 towards the service tax demand of Rs.17,22,685 along with interest and penalty.
The Commissioner (Appeals) remanded the matter to the Adjudicating Authority to determine whether the appellant has crossed the threshold limit of exemption during the period under consideration and on the basis of the documentary evidence produced by the appellant to re-determine the service tax liability on “renting of immovable property”, after allowing the benefit of exemption notification.
On remand, the Adjudicating Authority passed the order dated 30.03.2017 agreeing that each Mandi Samiti is an independent legal entity and should be treated as a separate body.
On appeal, the order has been affirmed, observing that the total receipts of the appellant during the subsequent financial years from 2009- 10 to 2012-13 were above the threshold limit for the exemption and hence they are not eligible to SSI exemption benefit.
The issue raised was whether the activity of letting out shops/AARATHS and other premises for shops and canteen, banks, etc. is liable to service tax.
The Tribunal referred to the Education Guide dated 20.06.2012 issued by the Board that any service provided by such bodies, which is not directly related to the agriculture and agricultural produce will be liable to tax e.g. renting of shops or other properties.
Arguments
The assessee contended that the authorities below have failed to bifurcate the amount for the purpose of evaluating the threshold limit available to the small scale service provider in terms of the Notification No.6/2005-ST dated 01.03.2005.
The assessee contended that the Authorities below ought to have bifurcated the rent of shop into exempted rents and taxable rents is unsustainable. In view of the Notification No.33/2012-ST dated 20.06.2012, which provided for “aggregate value” in Clause (vii) and (viii) of Para-2 and Explanation-B.
Conclusion
The tribunal noted that the provisions of the Notification, under which the appellant is claiming exemption, it is mandatory to follow the conditions for evaluating the threshold limit by arriving at the “aggregate value” of one or more taxable services provided by the service provider from one or more of the premises and not separately for each premises or each services.
The tribunal held that Clause (viii) of Notification No.33/2012-ST dated 20.06.2012 in clear terms sets out that the “aggregate value” of the taxable services rendered by the service provider from one or more premises shall not exceed Rs.10 lakhs in the preceding financial year. It is not permissible to pick and choose from the notification what is beneficial and discard what is against the party. The Notification has to be considered in entirety and the party claiming the benefit therein has also to satisfy the conditions enumerated therein.
The tribunal held that in a taxing statute, it is the plain language of the provisions that has to be preferred and where the language is plain and is capable of determining a defined meaning, strict interpretation is to be accorded. In the order, the Commissioner (Appeals) arrived at a finding that the total receipts of the appellant during the subsequent financial years from 2009-10 to 2012-13 were above the threshold limit for the exemption and hence they are not eligible to SSI exemption benefit.
FAQs
Is Service Tax On Letting Out Shops payable?
The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Krishi Utpadan Mandi Samiti Versus Commissioner of Central Goods & Service Tax and Central Excise has held that service tax on letting out shops and other premises for shops, canteen, and banks is applicable on Krishi Utpadan Mandi Samiti.
Case Details
Case Title: Krishi Utpadan Mandi Samiti Versus Commissioner of Central Goods & Service Tax and Central Excise
Case No.: Service Tax Appeal No.50920 of 2019
Date: 07.10.2024
Counsel For Appellant: CA Anil Kumar Jain
Counsel For Respondent: Harsh Vardhan
