2023-VIL-1087-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Renting of Immovable Property - Service Tax liability on sub-leasing of vacant land - Appellant executed Deed with the State Government and acquired portion land for a period of 99 years – Appellant relinquished their leasehold right on certain portion of the land and permanently assigned the same on long term lease in favour of the business entities vide Deeds of Assignment - whether this permanent assignment of land is covered under the definition of 'Renting of Immovable Property' as defined in Section 65(105)(zzzz) of the Finance Act,1994, after the amendment, with effect from 01.07.2010 – HELD – the Revenue is of the view that prior to 01.07.2012, only renting of vacant land was subjected to service tax which would be used for construction of buildings for furtherence of business or commerce, whereas w.e.f.01.07.2012, the definition of renting of immovable property has been widened to include everything with respect to transfer or any right to use an immovable property in any manner - the terms and conditions of the Deeds of Assignment clearly indicate that it is not a lease or sub-lease as alleged in the impugned order. In terms of Deed of Assignment, the Appellant does not have any reversionary right of the property after the after the permanent transfer of their leasehold rights to the business entities. It is only the assignees who have the right to get the lease renewed in their favour after completing the formalities directly with the Govt. and the appellant does not have any role in this regard - permanent assignment of land cannot be called as 'lease' and hence it would not fall under the definition of taxable service as defined under Section 65(105)(zzzz) of the Finance Act, 1994 - once the Appellant executed the Deed of Assignment in favour of the business entities, the 'Title' of the land which has been assigned to them has been transferred in the name of the said parties. Subsequently, lands have also been mutated in the name of the respective parties. Therefore, the transaction must be treated as 'sale of leasehold rights' and service tax would not be applicable on the outright transfer of rights - Further, after the transfer, the 'rent' was payable by the business entities directly to the DLLRO and not to the appellant. The Appellant have not received any consideration as 'rent' - price paid for transfer of possession or the right to enjoy the property is called the 'Premium or Salami' and the periodical payments made for continuous use of the property under lease is called 'rent'. The Appellant has received only a one time payment as Premium and the Premium received by the Appellant cannot be called as 'rent' - the demands of duty along with interest and imposition of penalty is set aside and the appeal is allowed
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