2018 (8) TMI 25 - AT - Service Tax

Renting of immovable property service - Whether the appellant are required to discharge service tax on the amount of rent received for leasing out their premises to M/s. Travelline International for carrying out hotel business on the said premises and whether the penalty is imposable on the appellant for failure to discharge the same and the quantum of penalty? Held that - Ld. Commissioner (Appeals) after interpretation of the scope of the definition of renting of immovable property prescribed under Section 65(105) (zzzz) of the Finance Act, 1994, particularly Explanation-I and Clause (d) thereof, recorded a categorical finding that the building have been given to M/s. Travelline International for carrying out the hotel business which consist 4 Conference Halls apart from rooms, kitchen, bar room etc. and thus the hotel was not used exclusively for residential or personal accommodation purposes - there is no discrepancy in the said reasoning of the Ld. Commissioner (Appeals) in absence of any evidence produced by the assessee-appellant, rebutting the said findings of the Ld. Commissioner (Appeals). Appeal disposed off.

Summary

Issues:
1. Discharge of service tax on rent received for leasing premises.
2. Imposition of penalty for failure to discharge service tax.
3. Quantum of penalty.

Analysis:
1. The appeals were filed by both the Revenue and the assessee challenging the order-in-appeal passed by the Commissioner of Central Excise. The case involved the lease of premises to conduct a hotel business, where the assessee failed to pay the total service tax due on the rent received. The Commissioner reduced the demand and penalty, leading to appeals from both parties.

2. The Revenue argued against the reduction in demand and penalty, emphasizing that the service tax on the notional interest amount collected as a deposit should be included. They also contested the benefit of Section 80(2) of the Finance Act, 1994, claiming the assessee did not comply with the conditions for penalty waiver.

3. The Tribunal considered whether the service tax was required on the rent received for leasing the premises for a hotel business and the imposition of penalty. The Commissioner's interpretation of the definition of renting of immovable property under the Finance Act, 1994 was upheld. The Tribunal found no discrepancy in the reasoning and confirmed the demand while rejecting the Revenue's appeal on this ground. Regarding penalty, the Commissioner's decision to not reduce the penalty under Section 80(2) was supported, as the assessee failed to prove a reasonable cause for non-payment of service tax.

4. The Commissioner's decision on penalty waiver under Section 80(2) was upheld, as the appellants did not pay the full liability within the specified time frame. The Tribunal concluded that the appellants were not liable for penalty during a specific period but reduced the penalty imposed for not filing returns. Both the Revenue and the assessee's appeals were dismissed, upholding the order-in-appeal.

5. In summary, the Tribunal affirmed the Commissioner's decision on the service tax liability and penalty imposition, finding no valid grounds to interfere with the reasoning provided. The appeals from both parties were dismissed, and the order-in-appeal was upheld.