2018 (2) TMI 1039 - AT - Service Tax

Renting of immovable property services - Penalty - case of appellant is that they have received compensation and not rent from seller - Held that - Though there was no agreement between the seller and appellant, still in the current circumstances it is seen that the appellant had allowed the seller to use premises for further renting, for a consideration - appellant could have availed the credit of Service Tax already paid by seller - demand upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Demand of Service Tax on renting of immovable property services and imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:
The appeal was filed against the demand of Service Tax on renting of immovable property services and imposition of penalty under Section 78 of the Finance Act, 1994. The appellant argued that they had purchased a property which was rented out by the seller to a third party at the time of purchase. The appellant received compensation from the seller for the period during which the property was rented out. The appellant contended that the amount received was compensation and not rent, as there was no direct agreement with the tenant. The appellant claimed that the service tax should not be applicable as the seller would have already paid tax on the amount received. However, the tribunal found that the amount received by the appellant was in respect of renting of immovable property, even though there was no direct agreement with the tenant. The tribunal noted that there was no evidence to support the claim that the seller had already paid service tax on the amount. The tribunal held that in such circumstances, the appellant could have availed credit for the service tax already paid by the seller. Therefore, the appeal was dismissed, and the demand for service tax and penalty upheld.