The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Delhi bench, while granting relief to the department of Fisheries, held that leasing out of water bodies for fishing rights not subject to Service Tax.
Earlier, the Revenue took a view that the same would amount to ‘renting of immovable property’ within the meaning of Section 65 (90a) of the Finance Act, 1994.
Department of Fisheries, Government of Rajasthan are auctioning various water bodies for fishing rights to various persons for the purpose of aquaculture. By auctioning these water bodies certain amounts are collected by the Fisheries Department of Government of Rajasthan on annual basis.
It was contended on behalf of the department that aquaculture and leasing of water bodies are two separate activities and, therefore, leasing of water bodies is not exempted from levy of service tax.
The division bench rejected the above contention by finding that water bodies can only exists on vacant land and for undertaking aquaculture, the presence of water bodies is absolutely essential and pre-requisite.
The bench observed that leasing of water bodies for fishing purposes is same as leasing of vacant land for aquaculture and therefore, same is fully covered under the exclusion clause of Section 65 of the Finance Act, 1994 and hence not leviable to Service tax.
Quashing the demand, the bench held that “Thus, it can be seen that fishing/ aquaculture is part of the broader definition of agriculture and thus exempted from levy of service tax. We are of the view that agriculture being in the negative list of items under Section 66D of the Finance Act, 1994 is not leviable to service tax and thus for this period also, the service tax is not leviable on leasing of water bodies.”
Coming to the period between 1.7.2012 to August, 2013, the bench observed that same provisions have continued in slightly modified way wherein the activity of agriculture has been included in the negative list of items under section 66 D of the Finance Act, 1994 and agriculture as defined in clause (3) of the Section 65 B, as „the cultivation of plants and rearing of all life-forms of animals, except the rearing of horses, for food, fiber, fuel, raw material or other similar products‟.
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