2013 (12) TMI 43 - AT - Service Tax

Demand of service tax - Cogent reason not given to show how demand is not sustainable - Held that - appellant had not brought the facts and figures and arguments necessary for determining relevant issues. It is not advisable to encourage such lackadaisical approach when it comes to compliance with tax laws. At the same time, we take note of the fact that the appellant is a body owned by the Tamil Nadu Govt and for the sake of balance of convenience, considering at least about 40% of rental income is from property given on rent to commercial establishments - Assessee directed to make a pre deposit - Partial stay granted.

Summary

Issues:
Dispute over non-payment of appropriate service tax for the period 2004-05 to 2009-10 on services including renting of immovable property, management, maintenance, repair, business auxiliary service, and inspection and testing.

Analysis:
1. The applicant, a State Public Sector Undertaking, was involved in constructing and renting/selling commercial and residential complexes. The Revenue department alleged non-payment of service tax for the mentioned services. Show cause notices were issued for the periods 2004-05 and 2009-10, leading to demands being confirmed by the adjudicating authority. The applicant filed appeals challenging the orders and sought stay petitions.

2. The learned counsel for the applicant argued various points regarding the demands. Firstly, he contended that the demand was based on all receipts treated as consideration for taxable services, emphasizing the need for a proper calculation. Secondly, in the case of renting of immovable property, he argued that only 40% of the property was rented to commercial organizations, hence service tax should apply to 40% of the consideration received. He also highlighted the confusion regarding the taxability of renting immovable property due to conflicting court decisions.

3. Regarding management, maintenance, and repair services, the counsel argued that the charges were for water supply and collection, not for providing a service, thus questioning the validity of the service tax demand. For business auxiliary services, he disputed the applicability of service tax on supervision and processing activities, citing CBEC clarifications and lack of specific sections under which the services fell. A minor issue of tax demand for inspection and testing was also mentioned.

4. The Revenue's representative countered the arguments, citing legal precedents and questioning the applicant's lack of documentation and clarity in their submissions. The Revenue insisted on pre-deposit requirements to ensure proper response and information provision for the case's conclusion.

5. The Tribunal, after considering both sides, noted the lack of essential facts and figures from the appellant, stressing the importance of compliance with tax laws. However, considering the applicant's government ownership and the balance of convenience, a pre-deposit of Rs.25,00,000 was ordered within six weeks. Subject to this deposit, the balance dues were waived for appeal admission, and there was a stay on collection during the appeal process, allowing both parties to mention the matter for further disposal.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and the final decision of the Appellate Tribunal CESTAT CHENNAI in the case involving service tax disputes.