The Eastern Zonal Bench at Kolkata of the Customs, Excise and Service Tax Appellate Tribunal, ( CESTAT ) recently held that no service tax is payable by a shopping mall that provides paid car parking facility to its customers or shop owners who avail such facility.
The present Service Tax Appeal was filed by M/s. South City Projects (Kolkata) Limited, a prominent real estate developer based in Kolkata.
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The Appellant here is a shopping mall that leases out spaces for shops to lessees on an agreement basis. The Appellant also pays service tax under the category of “renting of mobile property service”.
The lease agreements do not vest any rights on the lessee to use the car parking area; the car parking facility is available for use by customers and lessees alike, upon payment of a premium amount charged on an hourly basis.
The Appeal was filed against the Order-in-Original passed by the Commissioner of Service Tax Kendriya Utpad Shulk Bhawan confirming the demand amount of Rs.66,27,239/- from the Appellant, on the basis of Show-Cause Notice (SCN) alleging that the provision of paid car parking facilities provided by the shopping mall is liable to Service Tax.
Saurabh Bagaria and Indrani Banerjee, Counsels appearing on behalf of the Appellant relied on the case of Mahesh Sunny Enterprises P. Ltd. v. Commr. of Service Tax, New Delhi (2014), submitting that the amount collected as ‘car parking fee’ is specifically excluded from the definition of “renting of immovable property service” in light of Section 65(90a) of the Finance Act, 1994.
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The Eastern Zonal Bench at Kolkata of the Customs, Excise and Service Tax Appellate Tribunal constituted by Ashok Jindal, Judicial Member and K. Anpazhakan, Technical Member, relied on the decision of the Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal in the matter of Brookefields Estates Pvt. Ltd. v. Commissioner of Central Excise & Service Tax (2023) wherein it was held that “….a building or its part put up on land and which is used for car parking will get the benefit of the exclusion from levy of Service Tax under Section 65(105)(zzzz) ibid., as it stood then.”
In light of the observations made and precedents considered, CESTAT set aside the impugned Service Tax Order raised against the Appellant by the Revenue, while reiterating that no Service Tax is payable by the appellant for car parking fees under the category of “renting of immovable property service”.
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