Page 59 - GSTL_20th August 2020_Vol 39_Part 3

2020 ] STARCITY ENTERTAINMENT PVT. LTD. v. COMMISSIONER OF S.T., MUMBAI 273
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
rent irrespective of whether this rent is collected periodically or in advance
in lump sum. Service Tax under Section 65(105)(zzzz) read with Section
65(90a) cannot be charged on the “premium” or ‘salami’ paid by the lessee
to the lessor for transfer of interest in the property from the lessor to the les-
see as this amount is not for continued enjoyment of the property leased.
Since the levy of Service Tax is on renting of immovable property, not on
transfer of interest in property from lessor to lessee, Service Tax would be
chargeable only on the rent whether it is charged periodically or at a time in
advance. In these appeals, in the show cause notice dated 19-3-2012 issued
by the Addl. Director, DGCEI, New Delhi, Service Tax has been demanded
only on the lease rent and not on the premium amount while in the subse-
quent show cause notice dated 17-10-2012 issued by the Commissioner of
Central Excise and Service Tax, Noida, the amount of premium has also
been included in the lease rent for the purpose of charging of Service Tax
for which no valid reasons have been given. Therefore, the Order-in-
Original dated 30-4-2013 confirming the Service Tax demand on the premi-
um amount is not correct and to this extent, the Service Tax demand would
not be sustainable.’
was vehemently contested by Learned Authorised Representative during the
course of arguments in re RIICO Ltd. and recorded thus by the Tribunal
‘6. The Learned AR strongly contested the submissions made on behalf of
the appellant. To begin with, it is submitted that the appellants are a body
corporate registered as a company and, as such, cannot be equated to Gov-
ernment. The main dispute involved in these appeals is with reference to
Service Tax liability of the appellant on the lump sum premium received
from the allottees at the time of leasing out the vacant land. The Learned
AR submitted, admittedly, more than 90% of a tax liability is on this issue.
It is his submission that the Tribunal in Greater Noida Industrial Development
Authority (supra) observed that a lease is a transaction which has to be sup-
ported by consideration. The consideration may be either premium or rent
or both. The consideration paid periodically is called rent. Having categori-
cally recorded the said finding, the Tribunal erred in referring to the provi-
sions of Income-tax Act, 1961 while considering the value of service for tax
liability. The Learned AR strongly pleaded that when, admittedly, the ap-
pellant leased out the vacant land on a long term basis to allottees they re-
ceived consideration both in the form of lump sum one-time payment as
well as periodical lease rent. Both are for leasing out the land. Artificially
splitting up this single transaction into : (a) transfer of right of usage and (b)
continued enjoyment of land, is totally uncalled for. There are no two
transactions involved here. The land which is with the appellant is allotted
to a lessee on a consideration. The consideration is paid in two ways, by a
premium lump sum payment at the time of initial allotment and thereafter
on a periodical basis; a lease rent is also paid. It is not tenable to hold that
lump sum payment called premium or salami is towards sale of land and
the periodical payment is towards lease rent of the land. Such interpretation
will be self-contradictory as one cannot collect rent on a sold land.
GST LAW TIMES  20th August 2020  59