Page 54 - GSTL_20th August 2020_Vol 39_Part 3

268 GST LAW TIMES [ Vol. 39
issue in service tax, case laws do exist on the income tax and sales tax side.
Case law given by the Noticee that receipt of lease premium for 999 years is
a capital income and not revenue has been held by the Hon’ble Supreme
Court in case of M/s. Ukhara Estate Zamindaries (Pvt.) Ltd. v. Commissioner of
Income Tax, West Bengal. Further under the Wealth Tax Act, if the premises
is given on lease for more than 12 years, then the lessee is treated as
deemed owner on the leased premises. The ITAT, Mumbai ‘WT’ Special
Bench also in the case of, “Voltas Ltd. v. Assistant Commissioner of Wealth Tax,
Dated 16-11-2007, had held that in the case of lease of any building for a
term of not less than 12 years, by virtue of S/269UA of the Income Tax Act,
lessee shall be deemed to be the owner thereof in terms of the provisions of
Section 4(8) of the Wealth Tax Act.
Lastly it is seen that M/s. Movie Time Cineplex Pvt. Ltd. had paid stamp
duty on entire value of consideration. And the amount of stamp duty paya-
ble for sale of a commercial property and lease of a commercial property
exceeding 29 years is the same. The noticee has enclosed copy of ready
reckoner stating that in case of lease above 29 years, the stamp duty payable
is as per conveyance/sale under article 25 of the Bombay Stamp Act. This
further corroborates the concept that “lease of 999 years” is equivalent to
“sale”. The reason for transferring the said asset under lease of 999 years, as
stated by the Noticee, was merely to retain the right for any increase in FSI
on such land in future.
In view of the above I hold that the demand of service tax on the amount
received for giving lease for 999 years is not sustainable.’
in order-in-original, the proceedings in the notice were dropped. On appeal pre-
ferred by the jurisdictional Commissionerate, Commissioner of Central Excise &
Service Tax (Appeals-IV), Mumbai, vide Order-in-Appeal No.
PD/798/STI/2014, dated 26th September, 2014, reversed this order and, hence,
the appeal before us.
3. It is the contention of Learned Counsel that the transaction is nothing
but a sale and hence beyond the pale of taxability under Finance Act, 1994. It is
further submitted that the taxability of rentals was under challenge. Placing reli-
ance on the decision of the Tribunal that
‘10. Whether the Service Tax is chargeable only on the lease rent or also on
one time premium amount charged in respect of long term leases?
10.1 A lease is a transaction, which has to be supported by consideration.
The consideration may be either premium or rent or both. The considera-
tion which is paid periodically is called rent. As regards premium, the Apex
Court in the case of Commissioner of Income Tax, Assam and Manipur v.
Panbari Tea Co. Ltd. reported in (1965) 3 SCR 811 has made a distinction be-
tween premium and rent observing that when the interest of the lessor is
parted with for a price, the price paid is premium or salami, but the period-
ical payments for continuous enjoyment are in the nature of rent, the for-
mer is a Capital Income and the latter is the revenue receipt. Thus, the pre-
mium is the price paid for obtaining the lease of an immovable property.
While rent, on the other hand, is the payment made for use and occupation
of the immovable property leased. Since taxing event under Section
65(105)(zzzz) read with Section 65(90a) is renting of immovable property,
Service Tax would be leviable only on the element of rent i.e. the payments
made for continuous enjoyment under lease which are in the nature of the
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