Small service provider's exemption was available to each co-owner on letting out of jointly owned properties

Dilip Parikh v. Commissioner of Service-tax [2014] 41 taxmann.com 311 (Ahmedabad - CESTAT)

 

If a property, jointly owned by two or more persons, is rented out by such persons separately to a single person, all such co-owners would be eligible for small service provider's exemption of Rs. 10 lakhs separately.

Facts:

• The assessees, being co-owners of a building, rented out such building to a tenant and rent was received by all such co-owners separately through different cheques;
• Since rent received separately by each co-owner did not exceed Rs. 10 lakhs, they claimed threshold exemption under Notification No. 6/2005-ST, as amended;
• The Department argued that amount was to be assessed collectively and sought to club all receipts alleging that separation was made with a view to gain tax benefit.

The Tribunal held in favour of assessee as under:

• Rental agreement between parties clearly provided that all co-owners were individually renting out such building to a single person. Cheques were also separately received by them;
• Small service provider’s threshold exemption speaks of aggregate value of taxable services and if, individually, all co-owners were considered as separate service providers, their aggregate value did not exceed exemption limit;
• Hence, prima facie, case was in favour of the assessee and pre-deposit requirement was waived off accordingly.