2018 (7) TMI 1716 - AT - Service Tax

Renting of Immovable Property Service - appellant has not rendered the service tax liability for the amount of rent being received by him - demand of tax with Interest and penalty - Held that - It is apparent that the moment the liability of the appellant under Section 65 (90a) was brought to his notice, the appellant, despite his tenants did not cooperate and denied to pay the service tax on the rent, paid the sum of ₹ 6,41,984/- on 18.10.2012 for the period 01.06.2007 to 31.03.2012, i.e. before the impugned Show Cause Notice was received by the appellant (which was received on 19.10.2012). This particular fact makes it clear that there is no contumacious conduct for deliberate violation of the provisions of service tax laws on part of the appellant - penalty is to be waived by invoking section 80. Demand of Interest - Held that - Interest as per Section 75 of the Act is liable to be paid since service tax has been paid with delay - demand of interest upheld. Appeal allowed in part.

Summary

Issues:
1. Liability of the appellant for 'Renting of Immovable Property Services'.
2. Applicability of service tax retrospectively from 01.06.2007.
3. Imposition of interest and penalty on the appellant.
4. Plea of the appellant regarding lack of awareness of tax liability.
5. Benefit/immunity under Section 80 of the Act.

Analysis:

1. The appellant, engaged in commercial and industrial construction services, rented out immovable property for commercial use, falling under 'Renting of Immovable Property Services'. A Show Cause Notice was issued for non-payment of service tax on the rent received. The appellant admitted liability but claimed lack of awareness due to the retrospective imposition of tax from 01.06.2007.

2. The tribunal noted that the appellant accepted liability and paid the due amount upon notification, showing no deliberate violation. However, interest under Section 75 was deemed applicable due to delayed payment. The appellant was held responsible for paying the interest as directed by the Adjudicating Authority.

3. Regarding the penalty, the tribunal referred to a Supreme Court decision staying service tax collection on rental services till 31.09.2011 but clarifying no stay on future tax liability from 01.10.2011. The period in question fell under this decision, leading to the waiver of penalties under Section 80 of the Act by the Adjudicating Authority.

4. Consequently, the tribunal partly allowed the appeal, directing the Commissioner Adjudication to reassess the demand based on the observations made. The judgment upheld the liability of the appellant for the service tax on renting immovable property, the applicability of tax retrospectively, and the imposition of interest while granting immunity from penalties under Section 80 of the Act.