#Renting of Immovable Property

CESTAT Hyderabad has ruled that leasing railway premises for advertising hoardings constitutes renting of immovable property under service tax law, not a business support service. This means the reverse charge mechanism does not apply, relieving advertisers from liability to pay tax on behalf of railways and clarifying the tax treatment of infrastructure-based advertising contracts nationwide.

CESTAT Chennai ruled that leasing tea estates along with incidental labor, machinery, and infrastructure constitutes a single composite agricultural activity, not a taxable service under the Negative List regime. This clarifies that farmers and plantation owners can lease land with operational assets without triggering service tax liability, reinforcing the exemption for genuine agricultural operations.

CESTAT Hyderabad rules that job work constituting manufacture of excisable goods under the Finance Act, 1994, is exempt from service tax, even if the principal reimburses expenses. The ruling clarifies that the nature of the activity-not the reimbursement mechanism-determines tax liability, providing relief to manufacturers engaged in job work agreements.

CESTAT Chennai rules that renting immovable property for residential use-even if leased to a company and occupied by its managing director-falls under the statutory exemption from service tax under Section 65(105)(zzzz) of the Finance Act. The ruling clarifies that the nature of use, not the lessee’s identity, determines tax liability, offering relief to property owners and corporate lessors.

The CETAT holds that royalty and dead rent collected for mining leases are not taxable as renting of immovable property, as it constitutes a sovereign function under MMDR Act, 1957.