2015 (2) TMI 147 - AT - Service Tax

Penalty u/s 76 - Renting of immovable property - Held that - Penalty under Section 76 is imposable for failure to pay Service Tax, Section 80 (1) grants waiver from the payment of penalty if the assessee proves that there was reasonable cause for the said failure. In the present case, no doubt there was confusion regarding leviability of Service Tax on the renting of immovable property service due to various court decisions. The matter has still not attained finality in view of the decision pending in the Hon ble Supreme Court in the case of Retailers Association of India 2011 (10) TMI 12 - Supreme Court of India . However, at the same time, the Hon ble Supreme Court did not grant stay unconditionally. It only granted the conditional stay. As the recipient in this case did not observe conditions of the stay, the interim order of the Hon ble Supreme Court does not help the appellant who is the service provider in this case. Further, Government gave the benefit of waiver of penalty under Section 76 if the tax was deposited before 26.11.2012 under Section 80(2) of the Finance Act, 1994. The appellant paid the Service Tax on 10.12.2012 i.e after two weeks from the expiry of the period specified under Section 80(2). Clearly the waiver of penalty cannot be extended to the appellant in view of Section 80(2) because the Government had given enough opportunity to the appellant to deposit the tax before the date specified under Section 80(2). It is clear that normally the scheme is not applicable when the tax had already been paid before the introduction of the scheme. At the same time, Government has left a window open for taking a lenient view in some circumstances under Section 80 of the Finance Act, 1994. - appellant deserves a lenient view in the matter. - penalty under Section 76 of the Finance Act, 1994 is waived. The impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Penalty imposition under Section 76 of the Finance Act, 1994 for failure to pay Service Tax on renting of immovable property.
2. Invocation of Section 80 for waiving the penalty based on reasonable cause.
3. Eligibility for waiver under the Voluntary Compliance Encouragement Scheme (VCES).

Analysis:
1. The appellant appealed against the penalty imposed under Section 76 of the Finance Act, 1994 for not paying Service Tax on renting out premises to a company. The levy was challenged in court, and the matter was pending in the Hon'ble Supreme Court due to conflicting decisions. The appellant paid the Service Tax later, after the specified date under Section 80(2), leading to the imposition of the penalty.

2. The appellant's counsel argued for waiving the penalty under Section 80, citing precedents like The Agricultural Produce Market Committee case and the Motor World case, emphasizing the concept of "reasonable cause" as explained by the High Court. The appellant also sought relief under the VCES scheme, referring to the Vinayaka Securities case. The AR reiterated the Commissioner's findings, highlighting the condition under Section 80(2) for waiving the penalty.

3. The Tribunal considered the conflicting court decisions regarding the levy of Service Tax on renting of immovable property and the conditional stay granted by the Supreme Court. The appellant failed to meet the conditions set by the Supreme Court, leading to the conclusion that the waiver of penalty under Section 80 could not be extended. However, the Tribunal examined the case under the VCES scheme, where the tax and interest had already been paid before the scheme's introduction. Referring to a circular and the Vinayaka Securities judgment, the Tribunal decided to grant a lenient view and waived the penalty under Section 76.

In conclusion, the penalty under Section 76 was waived, the impugned order was set aside, and the appeal was allowed with any consequential benefit.