2019 (8) TMI 1565 - AT - Service Tax

Renting of Immovable Property Service - contention of the appellant is that the appellant is a partnership firm and has received rent on behalf of individual partners and after receipt of rent has distributed the same to the different partners therefore the partnership firm should not be taxed - HELD THAT - The said contention of the appellant is not tenable in law because as per the books of account and as per the record of the service receiver the payment is made to the appellant and this fact cannot be denied. There are no reason to interfere with the impugned Order-in-Appeal - appeal dismissed.

Summary

Issues involved:
Tax liability on Renting of Immovable Property Service provided by a partnership firm, distribution of rent among individual partners, applicability of service tax, penalty under Section 78 of Finance Act, 1994.

Analysis:
The case involved a partnership firm providing Renting of Immovable Property Service to a company, which led to a demand for service tax of Rs. 4,30,367. The Adjudicating Authority confirmed a demand of Rs. 2,76,310 along with interest and imposed a penalty. The appellant appealed, and the Commissioner (Appeals) modified the order, reducing the service tax demand to Rs. 2,44,903, interest, and penalty under Section 78 of the Finance Act, 1994 to Rs. 1,57,230. The appellant contended that being a partnership firm, they should not be taxed as they received rent on behalf of individual partners and distributed it among them. However, the Tribunal found this contention untenable in law, stating that payments were made to the partnership firm as per the books of account and the service receiver's records, making the firm liable for the service tax. Consequently, the Tribunal upheld the Order-in-Appeal and rejected the appellant's appeal.

This judgment clarifies the tax liability of a partnership firm providing Renting of Immovable Property Service and the distribution of rent among individual partners. It emphasizes that the firm cannot escape taxation by claiming to receive rent on behalf of partners and distributing it subsequently. The decision underscores the importance of proper record-keeping and adherence to tax regulations to determine the tax liability of service providers accurately. The judgment also highlights the consequences of non-compliance, as evidenced by the penalty imposed under Section 78 of the Finance Act, 1994. Overall, the case serves as a reminder for businesses to ensure compliance with tax laws to avoid penalties and disputes.