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CESTAT : Rent from leasing of seized property taxable; Recovery against borrower's dues inconsequential

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  • CESTAT holds that rent received against letting of seized property on account of recovery of outstanding dues, is taxable as “renting of immovable property” service;
  • Rejects assessee’s contention that such rent from lessee is towards recovery of dues from borrower permissible under SERFAESI Act, 2002 which cannot be treated as service charges so as to be liable to service tax;
  • States, “there is no provision in the Finance Act, 1994 for granting any exemption in respect of service charges, which is towards recovery of outstanding loan”,  while  observing that there is a lease agreement between assessee and lessee for which a lease rent is fixed and same is squarely covered under the category of “renting of immovable property service”;
  • However, finding force in assessee’s plea that in respect of one of the properties, service tax was paid by one of the parties to whom the property belonged, CESTAT remands matter for Adjudicating Authority’s verification;
  • Also sets aside demand on repair and maintenance expenditure incurred by lessee stating that same is not additional consideration for renting of immovable property : Mumbai CESTAT
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Guest Tuesday, 17 September 2019

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