By TIOL News Service

MUMBAI, AUG 08, 2014: THE applicant is Agricultural Produce Market Committee, Sangli .

They are before the CESTAT with an application for waiver of pre-deposit of Service tax dues of Rs.91,82,801/-, interest and penalty.

The demand arose because - the CCE, Kolhapur is of the view that the applicant is required to pay Service Tax on the “deposit” received in respect of shops given out on rent by them.

Incidentally, the applicant has already paid an amount of Rs.12.21 lakhs and interest of Rs.5.54 lakhs.

Before the CESTAT the applicant submitted that they had already paid Service Tax under the head “Renting of Immovable Property” on the quantum of rent received by them and which is a princely sum of Rs.1/- per square feet.They also produced the resolution passed by the APMC whereby the terms and conditions regarding renting of shops are settled.

The Revenue representative submitted that the applicants are receiving interest free deposit much more than rent and, therefore, the demand is rightly made.

To this submission, the applicant replied that the tenant of the shop is entitled for return of the deposit at the end of the lease period or on termination of the lease agreement.

The Bench observed -

"8. We find that prima facie as Revenue wants to levy service tax under the category of renting of Immovable property service on the deposit received by the applicant, hence the applicant had made out a strong case for waiver of pre-deposit. The pre-deposit of the remaining dues is waived and recovery thereof stayed for hearing of the appeal."

The Stay petition was allowed.

In passing : For the record, the deposit collected is Rs.100/- per sq. feet. Some “interesting” issue here…

Also see - Magarpatta Township Development & Construction Co. Ltd. 2013-TIOL-1068-CESTAT-MUM.

(See 2014-TIOL-1458-CESTAT-MUM)