Service Tax Exemption u/s 65(105)(zzz) of Finance Act is allowable when the Building or its Part is put up on Land and Used for Car Parking: CESTAT [Read Order]

The Chennai Bench of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) in a recent ruling held that Service Tax exemption under section 65(105)(zzz) of the Finance Act, 1994 is allowable when a building or its part put up on land and used for car parking.

M/s. Brookefields Estates Private Limited, the assessee-appellant is registered as a provider of taxable services under the category of renting of immovable property service [RIPS] and sale of space for an advertisement within the meaning of Section 65(105)(zzzz) and Section 65(105)(zzzm) of the Finance Act, 1994 respectively.

The appellant applied for a refund on 15.11.2012 seeking a refund of the Service Tax paid by them on the parking services provided by them during the period from 01.11.2011 to 30.06.2012. The appellant realized that they were not liable to pay any Service Tax on the parking charges as the same is not covered in the definition of RIPS, which prompted the appellant to seek a refund of Rs.12,57,268/-

A  Show Cause Notice dated 11.02.2013 was issued proposing, inter alia, to reject the refund claimed by the appellant. The appellant filed a detailed reply dated 25.03.2013 inter alia claiming that the parking space provided by them was “land” and not “building”, “land” could not be interpreted to mean “vacant land”. The adjudicating authority rejected the refund claim made by the appellant. On appeal, the first appellate authority confirmed the rejection.

The inclusive part of the definition of ‘immovable property’ covers inter alia building and part of a building and the land appurtenant thereto and also land incidental to the use of such building or part of a building. Clause (iv) of Explanation 1 excludes, inter alia, “land” used for educational, sports, circus, entertainment and parking purposes.

A two-member bench Mr P Dinesha, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) observed that the legislature has used the words “land” and “vacant land” by the context, wherever applicable. When “land” in a legal sense includes structures, if any, raised thereon, the same covers the land appurtenant to a building or a part of the building as well.

 Further 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.” 

The CESTAT set aside the impugned order and allowed the appeal.

Shri Dwarakesh Prabhakaran, Advocate appeared for the assessee and Smt. Anandalakshmi Ganeshram, Superintendent appeared for the revenue.

To Read the full text of the Order CLICK HERE

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