Permanent assignment of commercial space with right on leasehold land not lease: CESTAT rejects service tax demand

The CESTAT held that the permanent assignment of rights in commercial premises along with a leasehold land right should not be treated as “lease of immovable property” for service tax purposes. The transaction was one-time, capital in nature and did not generate recurring rentals. Accordingly, the demand for service tax under the renting category was rejected. The decision helps clarify the tax-characterisation of transactions combining land-rights and built-space and offers precedent for structuring such assignments with predictable indirect-tax outcomes.