By TIOL News Service

MUMBAI, DEC 02, 2016: THE appellant was using their vacant factory premises for renting to twenty-four different parties and was recovering a rent of Rs.9,500/- from each party every month and paying service tax on the same, under the agreement with the lessee.

They were also providing certain common services like (a) Security Guard, (b) Emergency Electricity Generator (c) Common sanitary block for workers (d) repairs & maintenance of factory building and (e) vehicle expenses.For these additional services, the appellant collected certain amounts from the tenants.

SCN was issued seeking to include the amount collected under the head of "Renting of Immovable Property Services".

Lower authorities confirmed the demand, so the appellant is before the Tribunal.

It is submitted that the additional services provided cannot be considered as "Renting of immovable property service" and, therefore, no demand can be confirmed under the said head.

The AR emphasized that the said amounts have been collected under a common agreement and, therefore, should be treated as the amounts received against RIPS.

The Bench extracted from the common agreement and which is worded below -

"4. The lease rent per month is fixed at Rs.9,500/- from 01/04/2008 onwards. The Party No. 2 (lessee) shall pay 1 year rent in advance to Party No. 1 (Lessors), then from next year Party No. 2 shall pay monthly rent to Party No.1 within one week of next month regularly. If the party No. 2 fails to pay the agreed rent in time, then 15% interest will be charged on outstanding rent amount.

5. In above monthly agreed rent Party No. 1 shall provide following facilities to Party No. 2.

a) Underground exhaust air trenches for the looms

b) Humidification duct for looms with water supply

c) Fall ceiling and required partitions

d) Common cabin for loom supervisors

6. Party No.1 shall charge to Party No. 2 actual expenses which party No. 1 provide following additional facilities to raise monthly debit note before 15th of next month on payment basis to party No. 2.

a) Security Guard for all time 3 shifts

b) Emergency Generator arrangement provide if MSEB power failure

c) Common sanitary block for workers and cold drinking water facility as well as street lights.

d) Repairs & maintenance of factory building

e) Vehicle expenses"

Thereafter, the CESTAT observed -

"5. A perusal of the above, clearly indicates that Rs.9,500/- per month is paid for the purpose of renting of the premises. The other amounts are paid as reimbursement for services listed in para 1. These services can no stretch of imagination of renting of immovable property services and therefore, demand under the said head cannot be confirmed..."

The impugned order was set aside and the appeal was allowed.

(See 2016-TIOL-3123-CESTAT-MUM)