1. The brief facts of the case are that the appellant M/s Gujarat Eco Textile Park Limited floated integrated textile park under the scheme of
integrated textile parks (SITP) formed by the Government of India (Ministry of Textiles). The appellant is Special Purpose Vehicle (SPV) a public
private partnership. The appellant SPV was formed for acquiring land and setting up infrastructure for establishing textile parks wherein different
member textile unit could operate. The Ministry of Textiles had engaged IL & FS as Project Management Consultant (PMC) for implementation of
scheme. The said PMC reports to Ministry of Textiles. Ministry of Textiles supervises the operation of the parks through said PMC. The SPV also
consists of representatives of Local Industries, Financial Institutions, state and Central Government representatives. The appellant company was
incorporated on 07.10.2005 under the said module with representation of Ministry and representation of Banks on board of the company. IL & FS
prepared detailed project report for the proposed park to be established by the appellant company. The said textile park project of the appellant
company was sanctioned and approved by the Ministry in PAC Meeting held on 25.11.2005 and sanctioned letter was issued on 30.12.2005. The draft
of share subscription agreement and lease deed was executed with M/s Radiance Spun Bond Private Limited became the first member of the project,
thereafter numerous other members joined textile parks as member and entered into share subscription agreement and lease deed periodically. In
terms of the scheme the member unit intending to establish other factor in the said park, executes share subscription agreement with SPV and became
member of SPV. On becoming member, they were entitled to allotment of a parcel of a land and access to other common facilities at the park.
Subsequent to the execution of the share subscription agreement the member units and SPV entered into lease deed for allotment of land situated in
the park. The appellant received the following payments during the execution of the aforesaid agreements from the member units.
A. The member unit pays to the SPV price of the equity share purchased by him for becoming an equity shareholder of the SPV.
B. The member unit pays to the SPV rent for allotment of parcel of land.
C. The member unit pays to the SPV non-refundable contribution towards capital expenditure of the park for developing and constructing the
infrastructure in the park.
D. Usage charges and variable expenses are also liable to be paid by the member unit to the SPV on the basis of the consumption of common
facilities and utilities.
1.1 On account of purchase of equity shares the unit becomes member of the SPV. The non-refundable contribution given by the members is invested
and used for construction/ development of infrastructure and common facilities in the industrial park as the scheme. The amount collected as rent and
user charges/ variable expanses from the members are treated as consideration for rendering service in nature of renting of immovable property and
other miscellaneous services and appropriate service tax has been paid by the appellant. Now the Revenue sought to demand service tax on the non-
refundable contribution made by the member units towards the expenditure of the park for developing and constructing the infrastructure under the
category of “renting of immovable property serviceâ€. The case of the department is that rental amount is collected in guise of non-refundable
contribution which is nothing but service charge against renting of immovable property service hence, liable to service tax.
2. Shri Paritosh Gupta, Learned Counsel appearing on behalf of the appellant, at the outset, submits that the issue in the present case is absolutely
identical to the case of the appellant which was decided by this Tribunal vide Order No. A/11729/2019 dated 12/09/2019. He submits that in the
present case there is no change of circumstances and the fact the only difference is the present demand is periodical for the subsequent period,
therefore, the issue remain the same. He submits that in view of the said judgment of the Tribunal demand in the present case is not sustainable. In
addition, he further submits that service tax is even otherwise not payable as service, if any, has been rendered by the SPV which is an incorporated
entity to its members, therefore, it cannot be said that any service exists between the incorporated entity and its own members. On this submission he
relied upon the Hon’ble Supreme Court judgment dated 03.10.2019 in the case of State of West Bengal vs Calcutta Club Limited 2019 (29) GSTL
545 (SC).
3. Shri H.K. Jain, Learned Assistant Commissioner (Authorized Representative) appearing on behalf of the Revenue reiterates the findings of the
impugned order. He also filed a written submission dated 18.01.2021 and argued the same. In support of his argument, he also placed reliance on the
following judgments:
• Hobbs Brewers India Private Limited vs Union of India 2016 (45) STR 60 (Tripura)
• Greater Noida Industrial Dev. Authority vs CCE 2015 (40) STR 95 (All.)
• Cinemax India Ltd. Vs UOI 2011 (24) STR 3 (Guj.)
4. We have carefully considered the submission made by both the sides and perused the records. We find that the case in hand and the case decided
by this Tribunal vide order dated 12.09.2019 is absolutely identical in respect of its fact and law point, therefore, there is no need to discuss the same
once again in this case. The Tribunal in the appellant’s own case in the identical facts and circumstances and law point vide order dated
12.09.2019 passed the following order:
“4.1 Demand of Rs.4,26,54,866/- has been made under the head of renting of immovable property service. It has been explained by Ld.
Counsel for the appellant that the appellant had set up a textile park under the scheme of integrated textile park (SIPP) floated by Ministry
of Textile of Govt. of India. In terms of the above scheme a Special Purpose Vehicle (SPV) on public provided partnership basis was
created. The appellant is the SPV. The SPV acquired land for setting up infrastructure and for establishing Textile Park. Thereafter on
08.10.2005 IL&FS was appointed as project management consultants. Detailed project report was prepared by PMC for the proposed park
to be established by the appellant on 15.11.2005. The said project was sanctioned and approved by the Ministry in PAC meeting held on
25.11.2005 and sanction letter was issued on 30.12.2005. The draft of share subscription agreement and lease deed, as circulated by the
PMC, was approved by the Board of the appellant company on 10.01.2006. The first share subscription agreement and lease deed was
executed with one of member units, namely, M/s Radiance Spun Bond Ltd. on 27.12.2006. It is seen that the levy of service tax was not there
during this period when the entire scheme was devised and the first share subscription agreement was entered into.
4.2 Service tax was introduced on renting of immovable property w.e.f. 01.06.2007. At the material time vacant land was not laible to
service tax. In this regard CBEC vide DoF No. 334/01/2007-TRU dated 28.02.2007 had clarified as follows:
“6.3 Renting of immovable property service :
Renting of immovable property for use in the course or furtherance of business or commerce [section 65(105)(zzzz)] is the taxable service.
Renting includes letting, leasing, licensing or other similar arrangement. The contract is for right-touse an immovable property for a
consideration. Immovable properties excluded from the scope of this service are :
• residential properties
• residential accommodation such as hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities Â
• vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes
• vacant land, whether or not having facilities clearly incidental to the use of such vacant land
• land used for educational, sports, circus, entertainment and parking purposes Similarly, renting of immovable property in the following
cases is also excluded from the scope of this taxable service, namely :-
(i) renting of immovable property by a religious body
(ii) renting of immovable property to a religious body,
(iii) renting of immovable property to an educational body, other than commercial training or coaching centre Commercial coaching or
training centre is defined under section 65(27).
6.3.1 Where renting of immovable property is a single composite contract involving part of property for use in commerce or business and
part of it for residential/accommodation purposes, for the purpose of levy of service tax under this subclause, entire property under the
contract is treated as property for use in commerce or business and accordingly the total value of the contract shall be the taxable value.â€
Thereafter introduction of Finance Act, 2010 w.e.f. 08.05.2010 levy of service tax on renting of vacant land was introduced. The issue was
clarified vide Dof No. 334/1/2010- TRU dated 26.02.2010 in following words:
“Amendments are being made in the definition of the taxable service ‘Renting of immovable property’ [section 65 (105) (zzzz)] to,-
(i) provide explicitly that the activity of ‘renting’ itself is a taxable service. This change is being given retrospective effect from 1-6-
2007; and
(ii) provide that renting of vacant land, where the agreement or contract between the lessor and lessee provides for undertaking
construction of buildings or structures on such land for furtherance of business or commerce during the tenure of the lease, shall be
subjected to service tax.â€
4.3 Earlier Hon’ble High Court of Delhi in the case of Home Solutions Retail India Ltd. 2007 237 (ELT) 209 Del had quashed and held
ultravirus the levy of immovable property service as introduced on 01.06.2007. The Finance Act, 2010 amended the definition of service
and gave it retrospective effect and introduced levy of service tax of vacant land under certain circumstances. From the above analysis it is
clear that there was no levy of service tax on vacant land prior to 08.05.2010.
4.4 Ld. Counsel has pointed out that there was no levy of service tax under the head of renting of immovable property service till
01.06.2007 and on vacant land till the introduction of Finance Act, 2010 on 08.05.2010. The agreement and the mechanism for the purpose
of collection of various amounts from the Member Units under the Scheme was devised almost one and half year before levy of Renting of
Immovable Property Service and 4 years prior to the introduction of the said service tax on vacant land. The said exercise was conducted in
overall supervision of Ministry through IL&FS, the PMC appointed with approval of Ministry. In these circumstances there cannot be any
intention on the part of the appellant to disguise rent as any other recovery. We find substantial merit in the argument of the appellant that
the entire scheme was devised and executed much before the levy of service tax was introduced under the head of renting of immovable
property service and therefore, the allegation that the appellant disguised the receipt of rent as nonrefundable contribution is totally
misplaced. A perusal of the SCN shows that there is no evidence whatsoever to support the allegation that what was collected was in fact
rent and not non-refundable contribution. It is also seen that the entire scheme was devised under the supervision of Ministry of Textiles
and it’s representatives. In these circumstances the allegation appears to totally baseless. The demand is set aside.â€
5. In view of the above decision of the Tribunal the demand of service tax under the head of renting of immovable property service on the onetime
contribution paid to the appellant by its members is not taxable.
6. We have also observed that though the entire case of the department is that one time refundable amount collected by the appellant from its member
units is the service charge against the provision of ‘Renting of Immovable Property Service’ but the department has not adduced a single
evidence in support of its allegation. Hence, the contribution of the department in this regard has no legs to stand. We have carefully considered the
submission of the appellant as regard the decision of the Hon’ble Supreme Court in the case of Calcutta Club (supra). In the said judgment also
the Hon’ble Supreme Court has held that the service provided by the company incorporated under the Companies Act to its members is not under
tax net. In the present case also, there is no dispute that the appellant is an incorporated company under the Companies Act and provided the service
to its own members, therefore, the ratio of the judgment in Calcutta Club (supra) directly applies to the appellant case also.
7. As regard, the judgments relied upon by the Revenue, the facts of the said judgments are different from the facts of the present case and moreover
the issue has already been settled by this Tribunal in the appellants own case and also by the judgment of the Hon’ble Supreme Court in the case
of Calcutta Club (supra), therefore, the judgments cited by the Learned Authorized Representative are clearly distinguished.
6. As per our view expressed herein above, the demand of service tax involved in all the three appeals are not sustainable, hence the same is set
aside. The appeals are allowed with consequential relief.
(Pronounced in the open court on 05.03.2021)
