2026-VIL-1507-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax liability on leasing of immovable property and club services by development authority - Meaning of term ‘Renting of Immovable Property’ - Appellant is statutory body created under statute for development of Delhi and performs functions under statutory mandate - Department sought to levy service tax on amounts received by Appellant against leasing or renting of land held on behalf of Government and club membership subscription charges - Appellant claimed that as statutory authority performing statutory functions it is not liable to pay service tax - Whether statutory body performing commercial activities of renting immovable property and providing club services is liable to service tax - HELD - The appellants were letting/giving on rent/lease, the Nazul lands on behalf of Central Government in the President of India on freehold basis and were receiving ground rent and one time premium holding it to be in the nature of land revenue - Whenever activity of any Governmental authority or authority created under statute amounts to an activity for commerce irrespective of status of such authority it is liable to pay service tax - Where sovereign or public authority performs statutory activity mandatory in nature and collects fee which is compulsory levy deposited into Government treasury such activity is not taxable service. However if such authority performs service not in nature of statutory activity and undertaken for consideration not in nature of statutory fee or levy then service tax is leviable if activity falls within ambit of taxable service - Activity of renting or leasing immovable property, including land, is taxable service under Section 65(105)(zzzz) of Finance Act 1994 - Renting of immovable property includes allowing or permitting use of space in immovable property irrespective of transfer of possession or control. Where Appellant received lease premium or ground rent against allowing use of Nazul land such amounts are not statutory levy but commercial consideration for providing use of property - Appellant earns amounts against renting which are not deposited into Government treasury and are not in nature of statutory levy but revenue earned from commercial activity - Appellant failed to produce documents establishing that activities were sovereign in nature. Further, the club membership and subscription charges for sports complex facilities are clearly commercial activities not statutory functions – The impugned orders are upheld and the appeals are dismissed
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