The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the activity of renting of phars / tin sheds / shops for marketing / trading of flowers is taxable under the head “renting of immovable property.”
The appellant, Delhi Agricultural Marketing Board, has purchased land at Gazipur area for the development of flower marketing committee. The appellant have given the sheds/shops/phars on rent to various traders and the activity of renting of such immovable property is subject to service tax under the category of renting of immovable property.
The Tribunal noted that the activities which are covered under Section 66D (a) are of the nature which are purely in the public interest and undertaken as a mandatory and statutory function.
The Tribunal found that the appellant is a body which is not a local authority and therefore the exemption under Section 66D (a) is not available to them.
“We are also of opinion that renting of shops/Phars is not the mandatory responsibility of the appellant. Coming to the provisions of Section 66 D (d) of the activities covered thereunder are primarily pertaining to agricultural and other relied activities but does not cover renting of land for construction of phar or shed for undertaking the business or commerce of trading in flowers, it therefore felt that the shops which are rented by the appellant for business does not fall under the negative list under Section 66D (d) of Finance Act, 1994. The provisions of Section 66D (d) (iv) of the Finance Act, 1994 only provides when the agriculture land is used for agriculture or for its producers but not for shops which are used for carrying out business or commerce,” the Tribunal said.
