2016 (11) TMI 583 - AT - Service Tax

Renting of immovable property services - Section 65 (104) (zzzz) of Finance Act, 1994 and Finance Act, 2010 - discharge of service tax on demand, but interest not paid - Held that - it mandates about recovery of service tax, interest, or penalty a fine or other charges which may not have been collected. As against such as specific clause which provides for recovery of interest, nothing survives in this appeal filed by the assessee for non-recovery of interest by the adjudicating authority. We do not find any reason to interfere in adjudicating authority s order for recovery of interest from the appellants - The appeal filed by the appellant to that extent is rejected. In view of the foregoing, the impugned order to the extent it confirms the demand of service tax liability and interest thereof is upheld and the appeal is disposed of.

Summary

Issues:
Service tax liability on renting of immovable property services for the period April 2009 to September 2009.
Discharge of service tax liability but not interest liability.
Validity of interest demand under retrospective amendment.

Analysis:

Issue 1: Service Tax Liability on Renting of Immovable Property Services
The appeal challenged an order demanding service tax liability on the appellants for renting out premises during April 2009 to September 2009. The appellants collected rent but did not initially discharge the service tax liability. After authorities highlighted the retrospective amendment to the Finance Act, 1994 and Finance Act, 2010, the appellants discharged the full service tax liability but not the interest. The adjudicating authority demanded interest but did not impose a penalty. The appellant contested the interest demand, leading to the appeal.

Issue 2: Discharge of Service Tax Liability but Not Interest Liability
The appellant contested the interest liability after discharging the service tax liability upon retrospective amendment to the Finance Act. The appellant argued against the interest demand, citing cases where retrospective amendments did not create interest liability. The Department contended that the validation clause of the Finance Act, 2010 mandated the recovery of interest, penalty, or other charges. The Tribunal noted the specific provision for recovery of interest in the validating clause and upheld the adjudicating authority's decision to demand interest from the appellants.

Issue 3: Validity of Interest Demand Under Retrospective Amendment
The Tribunal considered the validating provision of Section 77 of the Finance Act, 2010, which mandated the recovery of service tax, interest, penalty, or other charges retrospectively. The Tribunal found that since the appellants had collected rent, discharged the service tax liability, and the validating provision specifically allowed for the recovery of interest, there was no reason to interfere with the adjudicating authority's decision to demand interest. Consequently, the appeal was rejected, upholding the demand for service tax liability and interest, thereby disposing of the appeal.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both sides, and the Tribunal's decision regarding the service tax liability and interest demand under the retrospective amendment to the Finance Act.