2015 (9) TMI 633 - AT - Service Tax

Renting of Immovable Property - Penalty u/s 76, 77 & 78 - Held that - As per the above provision an assessee who paid the service tax on Renting of immovable Property before introduction of Sec 80(2) cannot be put at a disadvantage vis-a-vis a tax payer who delayed and paid tax on the same service after 6.3.2012. Further, there was a dispute on the levy of service tax on Renting of Immovable Property and the same was brought to the notice of the department by the appellant through a letter dt 12.6.2008. Accordingly, it has to be held that appellant had a reasonable cause for non-payment of tax during the relevant period. For such an eventuality waiver from penalties was always available under Sec 80 of the Finance Act 1994 even before the introduction of Sec 80(2). - Decided in favour of assessee.

Summary

Issues:
Imposition of penalties under Sections 76, 77, and 78 of the Finance Act 1994 in light of the introduction of Section 80(2) of the Finance Act 1994.

Analysis:

The appellant filed an appeal against the Order-in-Appeal dated 23.5.2013, contesting the penalties imposed under Sections 76, 77, and 78 of the Finance Act 1994 concerning the introduction of Section 80(2) of the same Act. The appellant's representative argued that the taxes in question were paid before the introduction of Section 80(2) and thus, the benefit of the said section should apply. Reference was made to the case of Camex Reality Pvt Ltd vs CST, Ahmedabad - 2014(36)STR.444 (Ti. Ahmd). On the other hand, the Revenue's representative contended that since the taxes were paid before the introduction of Section 80(2), the first appellate authority's decision against the appellant was correct.

Upon hearing both parties and examining the case records, it was noted that there was a dispute regarding the chargeability of service tax on 'Renting of Immovable Property,' with retrospective amendments made in 2010. Section 80(2) was added to the Finance Act 1994 on 6.3.2012, providing that no penalty shall be imposed for failure to pay service tax if the amount, along with interest, is paid within six months from a specified date. It was observed that an assessee who paid the service tax before the introduction of Section 80(2) should not be disadvantaged compared to a taxpayer who paid later. The appellant had raised the issue of service tax levy on 'Renting of Immovable Property' with the department in 2008, indicating a reasonable cause for non-payment during the relevant period. It was concluded that the appellant had a valid reason for non-payment, making them eligible for penalty waiver under Section 80 even before the introduction of Section 80(2).

In light of the above analysis, the appeal filed by the appellant was allowed, and the Order-in-Appeal dated 23.5.2013 was set aside by the Tribunal.