2013 (12) TMI 211 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Discretion under Section 35 (F) - renting of immovable property - Held that - Since in the light of the declared law as at present, and in particular, the retrospectively amended provisions of Section 65(105)(zzzz) of the Act, the Adjudication Order and the liability of the Petitioner determined thereunder, suffer from no infirmity whatsoever, we find no justification or warrant for exercising discretion to waive the pre-deposit requirement. The discretion conferred on this Tribunal is the discretion of law and not the subjective discretion of incumbents of the Tribunal - entire amount of service tax directed to be deposited - stay denied.

Summary

Issues:
1. Application for waiver of pre-deposit and stay for further proceedings.
2. Constitutional validity of Section 65(105)(zzzz) of the Finance Act, 1994.
3. Liability of service provider for remitting service tax on renting of immovable property.
4. Obligation to predeposit the assessed service tax, interest, and penalty under Section 35F of the Central Excise Act, 1944.

Issue 1: Application for waiver of pre-deposit and stay for further proceedings
The appellant filed an appeal against an adjudication order confirming a service tax demand for renting of immovable property service. The application sought waiver of pre-deposit and stay for further proceedings. The Tribunal analyzed the request in light of the statutory provisions and the declared law regarding the liability of the appellant.

Issue 2: Constitutional validity of Section 65(105)(zzzz) of the Finance Act, 1994
The Tribunal referred to a judgment by the full Bench of the Delhi High Court which concluded the issue of constitutional validity of Section 65(105)(zzzz). The Court overruled its earlier decision and upheld the retrospective operation of the relevant statutory provision. Similar views were taken by other High Courts, confirming the scope of Section 65(105)(zzzz). Consequently, the adjudication order in the present case was deemed impeccable.

Issue 3: Liability of service provider for remitting service tax on renting of immovable property
The Tribunal noted that the liability to remit service tax on renting of immovable property rests with the service provider and not the recipient. Even if the recipient had not reimbursed the service tax component due to pending litigation, the statutory liability of the service provider remained intact.

Issue 4: Obligation to predeposit the assessed service tax, interest, and penalty under Section 35F of the Central Excise Act, 1944
In assessing whether the obligation to predeposit the service tax liability should be waived, the Tribunal considered the current legal framework and the retrospectively amended provisions of Section 65(105)(zzzz). As the adjudication order was found to be legally sound, the Tribunal concluded that there was no justification for waiving the pre-deposit requirement. The Tribunal emphasized that its discretion was based on the law and not subjective considerations.

In conclusion, the Tribunal directed the petitioner to remit the adjudicated liability within a specified timeframe, failing which the appeal would be rejected for non-compliance. The application for waiver and stay was disposed of accordingly.