2015 (8) TMI 816 - AT - Service Tax

Levy of penalty - Renting of immovable property - waiver u/s 80 - Held that - Taxable service brought under statute, there was dispute and the matter has not yet reached finality as the appeal is pending before the Honble Apex Court in the case of Home Sales Retail India Ltd. I also find that the first appellate authority has recorded in impugned order as an issue involving question of interpretation of the provision of the law, I find that ld. counsel is right in contending that if this is a question of interpretation for setting aside penalties under Sections 76 & 77, the same reasoning would be applicable for penalties under Section 78. Having acknowledged that the issue involved in this case is the interpretation of the law, I find that upholding penalty under Section 78 of the Finance Act, 1994 seems to be incorrect. - issue is of interpretation of law of the imposition of Service Tax on renting of immovable properties, by invoking the provisions of Section 80 of the Finance Act, 1994. I set aside the penalty imposed under Section 78 of the Finance Act, 1994. - Decided in favour of assessee.

Summary

Issues:
- Appeal against Order-in-Appeal No.45/2013/(Ahd-III)SKS/Commr.(A)/Ahd., dated 15.03.2013
- Applicability of service tax on renting of immovable property by Agriculture Produce Market Committee
- Payment of service tax and interest within six months under Section 80(2) of the Finance Act, 1994
- Imposition of penalties under Sections 77 and 78

Analysis:
1. The appeal was directed against an Order-in-Appeal passed by the Commissioner (Appeals-III), Central Excise Bhawan, Ahmedabad, regarding the imposition of service tax on the renting of immovable property by the Agriculture Produce Market Committee. The Directorate General of Central Excise Intelligence Ahmedabad revealed the requirement for the appellants to pay service tax under the category of renting of immovable property service. The jurisdictional Assistant Commissioner confirmed the demand of service tax along with interest and penalties under Sections 77 and 78. The Commissioner (Appeals) upheld the demand of service tax and interest but set aside the penalties, subject to verification that the service tax and interest were paid within six months from the enactment of the Finance Bill 2012.

2. The appellant's argument centered around the confusion regarding the payment of service tax on activities of Agriculture Produce Marketing Committees (APMC) and the subsequent clarification issued by the Central Board of Excise and Customs. The appellant contended that they should be eligible for the waiver of penalty under Section 80(1) of the Finance Act 1994 due to reasonable cause for non-payment of service tax. Case laws were cited to support this argument. The Revenue argued that the impugned Order-in-Appeal was correctly passed as the service tax and interest were not paid within the stipulated six months under Section 80(2) of the Finance Act, 1994.

3. The Tribunal observed that there was confusion regarding the payment of service tax on renting of immovable property, which was clarified by the Central Board of Excise and Customs. The Tribunal found that the circumstances constituted a reasonable cause for the appellant's non-payment of service tax. Considering the unsettled nature of the issue and pending litigation, the Tribunal set aside the penalties imposed under Section 78 of the Finance Act, 1994, based on the interpretation of the law regarding the imposition of Service Tax on renting of immovable properties.

4. Consequently, the Tribunal set aside the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, invoking the provisions of Section 80(1) of the Finance Act, 1994. The appeal filed by the appellant was allowed based on the interpretation of the law and the circumstances surrounding the payment of service tax on renting of immovable property by the Agriculture Produce Market Committee.