Prior to 01.07.2012
Prior to Negative List concept, Renting of immovable property excluded land used for parking purpose. Therefore, it was not a taxable service and it was outside the ambit of service tax.
Chargeability from 01.07.2012 and thereon
This activity has not been listed in Negative list. Hence, service tax is levied on this service i.e. it is a taxable service. Although vide Notification no. 25/2012 it has been exempted in some cases.
Relevant extract of the notification has been produced as under:
“24. Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility;’’
From the simple reading of above item, it can be concluded that ONLY CONDITION IS THE PARKING FACILITY SHALL BE OPEN TO General Public.
General Public: Means the body of people at large sufficiently defined by common quality of public or impersonal nature.
Vehicle or motor vehicle as per the Motor Vehicles Act, 1988 includes car, truck, bus etc but excludes:
(a) Vehicle running upon fixed rails.
(b) Vehicle specially adapted for use only in a factory or any other enclosed premises.
(c) Vehicle less than four wheels and engine capacity of maximum 25 cc.
· In residential society/ commercial building, parking areas is allotted to members and monthly charges are recovered from members. As parking is not open to general public, hence benefit of E/N 25/2012 is not available.
· This exemption is not provider specific i.e. parking facilities provided by government or private players both are at par.
· For claiming exemption the facility of parking should be available to the general public. This means only that, anyone who pays the charges for parking shall be allowed to park the vehicle.
It should be noted that exemption is not available for service of leasing a space for providing parking facility for general public.
Illustration: M/s. XYZ Ltd.(Any Person) leases the space for providing parking facility to M/s. ABC(Any Person). The said transaction is not exempt. When M/s. ABC provides parking facility on the said land to General Public, it will be exempt.
Disclaimer: Although every precaution has been taken in writing the article. Author will not be responsible for any damage or loss in whatever manner consequent to any action taken on the basis of any content of this Article.
By: CA Ankit Gupta
Email: argtaxconsultants@gmail.com
CAclubindia
