2014 (8) TMI 1079 - AT - Service Tax

Tax liability - service tax on renting of immovable property services - levy of penalty where bonafides are proved - Held that - I find that Commissioner (Appeals) has fairly accepted the request that penalty invoking under section 78 of the Finance Act, 1994, was not leviable as bonafides were proved. The Ld. DR submitted that appellants contended that they were not aware about leviability of service tax on renting of immovable property services. He also pleaded that ignorance of Law cannot come to the waiver for the payment of duty. However it is fairly considered by dropping the penalty. Appellant have also complained that M/s. Nagar Palika Parishad have not been co-operating with the Department and have not provided them required information which has ultimately been collected by taking the recourse to RTI. The penalty is rightly waived. But challenge to invocation of extended period of limitation on payment of duty due to ignorance of Law is not a valid ground. Once a service is provided and that service is taxable, tax liability has to be discharged accordingly - appeal dismissed - decided against Revenue.

Issues:
1. Appellant's absence during the hearing and subsequent proceedings.
2. Confirmation of demand for service tax on renting of immovable property services.
3. Waiver of penalty under section 80 of the Finance Act, 1994.
4. Challenge to the invocation of the extended period of limitation.
5. Appropriation of the deposited amount.
6. Ignorance of law as a ground for waiving penalty.

Analysis:

1. The appellant was absent during the hearing despite multiple notices, indicating a lack of interest in following the judicial process. The appeal was finalized with the assistance of the Ld. DR due to the appellant's non-appearance.

2. The appellant, engaged in renting immovable property services, was found liable for service tax under section 65(105)(zzzz) of the Finance Act, 1994. The Adjudicating Authority confirmed the demand for service tax along with interest and imposed a penalty, which was later waived under section 80 of the Finance Act, 1994 by the Commissioner (Appeals).

3. The appellant contested the confirmation of duty by the Commissioner (Appeals), arguing that the extended period of limitation could not be invoked. They also claimed a bonafide belief that they were not liable to pay service tax, which was not considered a valid ground for waiving the penalty.

4. The Ld. DR highlighted the appellant's lack of cooperation with the Department in providing required information, which led to the Department obtaining the information through RTI. The appellant's ignorance of the law regarding the leviability of service tax on renting of immovable property services was not accepted as a valid reason for waiving the penalty.

5. The issue of appropriation of the partly deposited amount was raised, emphasizing discrepancies in the order of the Adjudicating Authority regarding the appropriation. The Ld. DR requested appropriation of a specific amount, which was subject to further consideration by the Adjudicating Authority.

6. The Tribunal found that while the penalty was rightly waived, the challenge to the invocation of the extended period of limitation based on ignorance of the law was not a valid ground. The Tribunal upheld the Commissioner's order, stating that once a taxable service is provided, the tax liability must be discharged accordingly.

In conclusion, the Tribunal rejected the appeal, finding no infirmity in the Commissioner's order and emphasizing the importance of complying with tax liabilities even in cases of ignorance of the law.

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