Finding that the ultimate purpose of the agreement, as seen from the joint intent of the parties, is for the appellant to engage SPIPL in providing a car parking facility to the public on a profit-sharing basis, the Chennai Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that such an agreement cannot be considered as leasing of space to an entity for providing a parking facility, and the receipts cannot be categorised as rent.
The Division Bench comprising Ajayan T V (Judicial Member) and M Ajit Kumar (Technical Member) observed that the appellant has engaged SPIPL because of its expertise, experience, knowledge and technical know-how in the operation of car parks. Further, in consideration of the appellant engaging the services of SPIPL, they (SPIPL) are required to share the monthly car park revenue after adjusting the direct operating expenses with the appellant.
The Bench further observed that the entire amount collected is first deposited in the bank account maintained by the appellant, after which the share pertaining to the SPIPL is remitted to them. Thus, the amount received is hence in the nature of a sharing of profits, which can vary from month to month and cannot be considered as rent.
The Bench went on to observe that, in the light of the order of the Commissioner (Appeals) in OIA No. 154-156/2014 (MST) dated March 14, 2013, not having been challenged by either of the parties, it has become final. However, the impugned OIA 239/2016(STA-III), dated November 28, 2016, passed subsequently and involved identical facts, has, after considering the OIA dated March 14, 2013, taken a diametrically opposite stand in a very cryptic and facile order.
The Bench explained that, as per judicial comity or judicial discipline, a decision of the earlier Commissioner (Appeals) on identical facts should be followed subsequently by the same Authority, unless it is shown that the earlier order has been modified or set aside in appeal, which is not the case here, and this would help promote certainty and consistency in quasi-judicial decisions and provide assurance to the trade and public on the uniform application of law.
Briefly, the appellant had leased out their parking area to one Smart Parking India Pvt Ltd. (SPIPL) for parking of public vehicles in the basement of their shopping malls and in an additional parking area for which the appellant received 78% car park revenue collected by SPIPL. Now, the Revenue Department was of the view that Notification No. 25/2012-ST, providing exemption to services by way of vehicle parking to the general public, excluded ‘leasing of space for an entity for providing parking facility’ from the exemption.
Hence Show Cause Notice was issued for demanding service tax of Rs. 20.67 lacs for the period from July 2012 to March 2013. The adjudicating authority confirmed the demand and also imposed a penalty, which order was upheld by the Commissioner (Appeals), even though the appellant pointed out that the demands for the previous period were dropped by the Commissioner (Appeals) vide OIA no. 154-156/2014 (MST) dated March 14, 2014.
Case Relied On:
Great Eastern Shipping Company Ltd. vs. State of Karnataka [2020 (32) G.S.T.L. 3 (S.C.)]
Appearances:
Advocate N Asmitha, for the Appellant/ Taxpayer
G Kripa, for the Respondent/ Revenue
