2017 (9) TMI 786 - AT - Service Tax

Renting of immovable property service - Levy of tax - collection of Sopo charges from various persons for use of the vacant land in the municipal area - Held that - The grounds of appeal do not contain any argument in support of appeal. In view of lack of any argument in the grounds of appeal, we do not find any reason to interfere with the impugned order in so far as the demand of service tax on Sopo charges for use of vacant land are concerned, especially since the issue is squarely covered in decision relied on in the impugned order. Extended period of limitation - Held that - It is apparent that once revenue had on 08.09.2008 informed respondent that they were liable to pay service tax on the rental income the case of bonafide for non-payment of service tax thereafter does not survive. However, it is seen that the period from 08.09.2008, first letter was received to the Chief Officer of the respondent the period would be covered from the normal period of limitation. Thus for the period prior to that the appellants can claim a bonafide belief that they are not liable to pay service tax. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Levy of service tax on Sopo charges collected by the respondent MMC.
2. Invocation of extended period of limitation for service tax imposition.
3. Imposition of penalty under Section 78 of the Finance Act.
4. Challenge to levy of service tax on shops rented out by MMC.
5. Claim of bonafide belief by the respondent regarding service tax liability on renting of immovable property service.

Analysis:
1. The appeal was filed by the Commissioner of Central Excise against an order granting partial relief to the respondent MMC regarding the collection of Sopo charges. The Commissioner (Appeals) set aside the demands on Sopo charges, ruling that vacant land is not covered under the Renting of Immovable Property service. The respondent argued that the markets developed by MMC are part of their constitutional responsibility, exempting them from service tax. The Tribunal upheld the decision, citing relevant legal provisions and circulars exempting activities in public interest from service tax.

2. The issue of invoking the extended period of limitation for service tax imposition was raised. The Tribunal noted that the revenue informed the respondent about service tax liability in 2008, which affected the period covered by the extended limitation. The Tribunal considered the respondent's bonafide belief regarding service tax liability, especially given the ongoing disputes in various courts on the matter, and ruled in favor of the respondent.

3. The imposition of penalty under Section 78 of the Finance Act was sought by the revenue. However, the Tribunal did not find any reason to interfere with the order regarding the demand for service tax on Sopo charges, as the issue was covered by relevant legal decisions and lacked counterarguments from the revenue.

4. The challenge to levy service tax on shops rented out by MMC was based on the argument that the markets developed by MMC are part of their constitutional responsibility. The Tribunal analyzed the relevant constitutional provisions and schedules, concluding that markets do not fall under the responsibilities listed, and dismissed the appeal.

5. The respondent claimed a bonafide belief that they were not liable to pay service tax on renting of immovable property service. The Tribunal considered the timing of communication from the revenue to the respondent regarding service tax liability and the ongoing legal disputes, ruling in favor of the respondent's belief. The appeal was dismissed, along with the cross objections.

Overall, the Tribunal upheld the decision of the Commissioner (Appeals) regarding the levy of service tax on Sopo charges and the respondent's bonafide belief, dismissing the revenue's appeal and the cross objections.