2017 (3) TMI 17 - AT - Service Tax

Benefit of N/N. 13/2010-ST dated 27.02.2010 - denial on the ground that the benefit not available to service recipient - exemption in relation to on-line information and database access or retrieval services and business auxiliary services provided by News Agency - Held that - the legal fiction cannot be restricted only to collection of tax without applying any concession of the notification applicable thereto when the conditions of the said Notifications are fulfilled by the recipient of such service. Section 66A stipulates that taxable service shall be treated as if provided by the recipient of service in India and accordingly, all the provisions of Chapter V shall apply, here the tax liability is put on the appellant on such legal fiction. It is not legally tenable to hold that such legal fiction will have limited application only for payment of service tax and not with reference to any concession available to such service tax. Appeal allowed - decided in favor of appellants.

Summary

Issues:
1. Eligibility for exemption under Notification No. 13/2010 as a recipient of service
2. Penalty imposed on the service tax payable on the sale of space

Analysis:

Issue 1:
The appellant, registered for providing taxable services, claimed exemption under Notification No. 13/2010 for renting immovable property and sale of space for advertisement services. The Department allowed the exemption as a service provider but denied it as a service receiver, confirming a service tax demand. The appellant argued that as a service receiver, it was liable to pay service tax under Section 66A of the Finance Act, 1994, and thus entitled to the exemption. The respondent contended that the appellant did not fulfill the conditions of the notification. The Tribunal analyzed Section 66A, which deems the recipient of service as the provider for tax purposes, applying all provisions of Chapter V. The Tribunal found that the legal fiction of Section 66A extends to concessions like exemptions when conditions are met. As the provider was liable for service tax under Section 66A, all provisions of Chapter V, including exemptions, applied. Therefore, the Tribunal allowed the appeal, stating the impugned order's finding on this issue was not sustainable.

Issue 2:
The appellant also challenged the penalty imposed on the service tax payable for the sale of space, arguing that the tax had been paid regularly, and no demand or appropriation was necessary. The Tribunal noted that the tax payment was acknowledged in the impugned order and thus found the penalty for non-payment unjustifiable. Consequently, the penalties related to the service were set aside. The appeal was disposed of accordingly.