Church Rental Taxability

The Bangalore Bench of the CESTAT has held that rental income earned by a church from commercial shops situated within its premises is liable to service tax for the period commencing from 1 July 2012. 

The Tribunal ruled that mere registration as a charitable trust under Section 12AA of the Income-tax Act does not automatically entitle an entity to exemption under Notification No. 25/2012-ST. 

However, recognising the bona fide belief entertained by the assessee, the Tribunal restricted the demand to the normal period of limitation and set aside all penalties.