Re: Service of Renting of Immovable
Property– Section 65(105)(zzzz)
As
per Notification No.23/2007 dated
22.05.2007, “taxable service” means any service provided or to be provided
to any person, by any other person, by renting of immovable property or
any other service in relation to such renting of immovable property for use in
the course or, for furtherance of, business or commerce.
Renting of
immovable property includes
renting, letting leasing, licensing or other similar arrangements of immovable
property for use in the course of furtherance of business or commerce but does
not include-
(i)
renting
of immovable property by a religious body or to a religious body;
or
(ii)
renting
of immovable property to an educational body, imparting skill or
knowledge or lessons on any subject or field, other than a commercial training
or coaching centre.
Point 5 of Mega Notification No. 25/2012 dated 20.06.2012 exempts the following taxable
service from the whole
of the service
tax leviable thereon
under section 66B of the Service Tax Act:
Services
by a person by way of-
(a) renting of precincts of a religious
place meant for general public; or
(b) conduct of any religious ceremony;
Our opinion:
Even though the law does not clearly state so, but the legislation intention is
to exempt religious places from service tax on activities conducted for
religious purposes or for non-commercial use by the general public. The
abovementioned clause has been incorporated in the mega notification to affect
the same. The same benefit cannot be extended for renting of premises for a
commercial purpose. Hence, the activity of renting out property to any person
carrying out commercial business will attract service tax liability.
It is to be noted that any
property tax paid for the period of renting out such property will be deducted
from the rent received during that period for computation of service tax.
(Notification No. 29/2012 dated 20.06.2012)
Re: Sponsorship Services – Section 65(105)(zzzn)
Section
65(105)(zzn):
Taxable service means any service provided or to be provided to any persons,
by any other person receiving sponsorship, in relation to such sponsorship, in
any manner, but does not include services in relation to sponsorship of sports
events.
Taxable
service means any service provided or to be provided to anybody corporate or
firm, by any person receiving
sponsorship i.e. an external person for a consideration. The term body
corporate or firm are having wide meaning and shall include all commercial
concerns.
Section
65(99a): “Sponsorship” includes naming an event after the sponsor, displaying
the sponsor’s company logo or trading name, giving the sponsor exclusive or
priority booking rights, sponsoring prizes or trophies for completion; but does
not include any financial or other support in the form of donations or gifts,
given by the donors subject to the condition that the service provider is under
no obligation to provide anything in return to such donors.
As
per Point 1(A)(iii) of Notification No. 30/2012 dated 20.06.2012,
in case of taxable services provided or agreed to be provided by way of sponsorship to anybody corporate or partnership
firm located in the taxable territory, 100% of the service tax in
respect of such services is to be paid by the service receiver.
Our opinion: Clearly, a charitable
organization will be the service provider according to the definition stated in
the service tax law. Any corporate or firm receiving such services from the charitable
organization will be itself liable to deposit service tax @12.36% on the amount
given as sponsorship.
·
However, in case the
charitable organization takes funds for an event with no obligation to display
the name of the provider of the funds, such an amount received is not
“sponsorship”, but is in the form of a voluntary donation without consideration.
In this case, the provider of funds should give in writing that the charitable
organization is not bound by any obligation to display their logo, trademarks
or business names during the event, or in relation to it.
