Renting to Central Excise - no Service Tax?
05.03.2008
Wednesday
The CBEC has clarified to the field that
Renting of immovable property” has been brought under tax net w.e.f . 1/06/2007 . This service includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or in furtherance of business or commerce. If the rented immovable property is being used in furtherance of business, it is liable to services tax. It does not matter whether the Government or private parties rent it. Hiring Central Excise office does not fall under furtherance of business and commerce as it is an activity of performing statutory functions by a public authority and not an activity of business or commerce. Therefore, it is not liable to pay service tax under taxable service category of “renting of immovable property”
But the Act stipulates
( 90a ) "renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include -
( i ) renting of immovable property by a religious body or to a religious body; or
(ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre.
Explanation. - For the purposes of this clause, " for use in the course or furtherance of business or commerce " includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings;
So, as per the explanation, office is included and there is nothing statutory about it.
Now who will collect Service Tax from the Service Tax Department? Can we allege that the Central Excise Commissioner is abetting evasion of Service Tax?
CBEC letter F. No. 137/280/2007- CX -4 dated 17 th December 2007