2015 (8) TMI 862 - AT - Service Tax

Penalty u/s 76, 77 & 78 - renting of immovable service - Held that - Liability under renting of immovable service were challenged and same is still pending before the Hon ble Apex Court, in these circumstances, appellant are entitled for benefit of Section 80 of the Finance Act, 1994. As they were under doubt whether they have to pay service tax on the above service or not. In these circumstances, by invoking the provision of Section 80 of the Finance Act, 1994, I waive the penalty under Sections 76 and 77 of the Finance Act, 1994 and set aside the impugned order qua confirming the penalty under Sections 76 & 77 of the Finance Act, 1994. - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty under Section 76 of the Finance Act, 1994.

Analysis:
The appeal was filed against the confirmation of a penalty amounting to Rs. 2,80,732 under Section 76 of the Finance Act, 1994. The case involved the renting of an immovable property, which became taxable under the service tax net from June 2007 as per the Finance Act, 2007. Following an investigation at the appellant's premises, they paid the service tax along with interest. Subsequently, a show-cause notice was issued for appropriating the service tax amount, interest, and imposing penalties under various provisions of the Finance Act, 1994. The Commissioner (Appeals) dropped the penalty under Section 78 but confirmed penalties under Sections 76 and 77, albeit reducing the amount. The appellant challenged this decision, arguing that they could not deposit the service tax in time due to pending challenges in the Hon'ble Delhi High Court and the Hon'ble Apex Court regarding the levy on renting of immovable property. The appellant sought immunity from penalties under Section 80 of the Finance Act, 1994.

The tribunal considered the appellant's argument, noting that the issue of liability under renting of immovable property services was still pending before the Hon'ble Apex Court. Given the uncertainty surrounding the applicability of service tax on the said service, the tribunal found that the appellant was entitled to the benefit of Section 80 of the Finance Act, 1994. Consequently, invoking the provision of Section 80, the tribunal waived the penalty under Sections 76 and 77 of the Finance Act, 1994. The impugned order confirming the penalties under Sections 76 and 77 was set aside, and the appeal was allowed with consequential relief. The stay application was also disposed of accordingly.