Residential Property not Subject to 'Rental Services of Commercial Property' Charges: CESTAT [Read Order]

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that residential property is not subject to 'Rental Services of Commercial Property' charges.

Gujarat State Electricity Corporation Ltd, appellant-assessee, contested a duty demand of Rs. 13,11,317/- for rent paid on residential accommodation provided to the employee of one of its contractors between April 2011 and June 2015. The assessee asserted that the accommodation was residential in nature and not a commercial property, as there was no evidence to suggest any commercial renting or use of the property.

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The assessee's counsel argued that simply because the accommodation was provided to the contractor's employee, it did not change the nature of the transaction, which was related to renting residential property. The assessee stated that there was no commercial renting involved, and the property in question was for residential use.

The counsel, representing the department, conceded that the accommodation was indeed used for residential purposes.

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A two  member bench comprising Somesh Arora ( Judicial Member ) and C.L.Mahar ( Technical Member ) In light of these considerations and the fact that both parties had no objections, the matter was expedited for decision. The undisputed fact that the property was used solely for residential purposes led to the conclusion that it did not qualify for a duty charge under commercial property rental services.

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Given the lack of evidence supporting the classification of the property as commercial, the tribunal set aside the order of the lower authority. Consequently, the appeal was allowed, and the assessee was granted the appropriate relief.

To Read the full text of the Order CLICK HERE

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