IMMOVABLE PROPERTY NOT LIABLE TO SERVICE TAX
Renting of immovable property not liable to Service Tax but service Tax relation to Renting of Immovable property is taxable service under 65 (105) (zzzz).
The recent decision of Home Solution Retail India Ltd V/s UOI in the High Court of Delhi.
Renting of immovable is not any value addition to business or commerce. Mere renting of property is not the cause of the taxing.
Taxable service of Renting of immovable property service vis a vis Mandap Keeper Service –Service provided by the mandap keeper entirely different in nature of service under sec 65 (105) (zzzz).
Extract of the case:
The petitioners have made the defense on the ground that the mere renting of property is not any value addition.
Explanation one of the Section “Immovable property Includes “:
1) building and part of building and the land appurtenant thereto;
2) land incidental to the use of such building or part of a building;
3 )in case of building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate.
Interpretation of tax statues finance Act 1994 Use of expression in relation to in Service Tax provisions Expression “ in relation to” may be of widest amplitude but it has been said act as per its context. Some times “in relation to” includes subject matter following it and on the other occasions it would not.
From this analysis, it is clear that we have to understand as to whether renting of immovable property for use in the course or furtherance of business of commerce by itself is service. There is no dispute that any service connected with the renting of such immovable property would fall within the ambit of Sec 65 (105) (zzzz) and would be exigible to service tax. The question whether renting of such immovable property by itself constitutes a service and thereby, a taxable service. We have already seen that service tax is value added tax. It is a tax on value addition provided by some service provider. Insofar as renting of immovable property for use in the course or furtherance of business or commerce is concerned, we are unable to discern any value addition. Consequently, the renting of immovable property for use in the course or furtherance of business of commerce by itself does not entail any value addition and, therefore cannot be regarded as a service. Of course, if there is some other service such as air conditioning service provided along with the renting of immovable property then in would fall within section 65 (105) (zzzz).
So, need to discussion on the part of two folds of the interpretation that what to be consider as the ” Renting of Immovable Property” and “Related Services” section 65 (105) (zzzz).
If your Organization is engaged in any trade or commerce and having the Factory i.e. building. The renting of building or factory is in as a part of “Renting of Immovable property” but the “Plant and Machinery” and renting with the plant and machinery is related service to the “Renting of Immovable property” under Sec 65 (105) (zzzz)
C .A. Kothi
Consultant Service Tax.