A. As per Notification No. 6/2005-ST dated 1.3.2005 and amended vide Notification No. 08/2008-ST dated 1.3.2008, the threshold exemption limit of `10 lakh is applicable per service provider and not per service. Hence, all the co-owners or joint owners will be eligible to claim the commonly known small service provider exemption of `10 lakh. The CESTAT, in one such case of Dinesh K Patwa, Shrerik. K Patwa & Others vs CST, Ahmedabad (STO 2012 CESTAT 474), observed that such exemption is available. In the said case where the individuals were co-owners of a particular building and have rented out the premises to a person, who issues different cheques to all the above individuals as they are co-owners, the amount received by the individuals would be within the threshold limit of SSI exemption as granted by the notification. However, the revenue department has considered the amounts received by all of the applicants as a collective unit and seeks to charge the service tax liability individually on the persons.
The department has argued that the property involved in this case is jointly owned by all the persons and is being rented out. Hence, there is the service of renting out of an immovable property and threshold limit benefit cannot be extended to individuals. After considering the submissions made by both sides, the CESTAT held that benefit of SSI exemption grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of `10 lakh in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it’s indicated in the agreement between the individuals for the purpose of renting out the premises to another person so as to make it specific that individually they are renting out the property to a person. The notification talks about the aggregate value of the taxable services rendered, which should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit.
The department has argued that the property involved in this case is jointly owned by all the persons and is being rented out. Hence, there is the service of renting out of an immovable property and threshold limit benefit cannot be extended to individuals. After considering the submissions made by both sides, the CESTAT held that benefit of SSI exemption grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of `10 lakh in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it’s indicated in the agreement between the individuals for the purpose of renting out the premises to another person so as to make it specific that individually they are renting out the property to a person. The notification talks about the aggregate value of the taxable services rendered, which should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit.
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