2018 (9) TMI 583 - HC - Service Tax

Restoration of Appeal - Renting of Immovable Property Service - Whether in facts and circumstances of the case, the Appellate Tribunal was right in dismissing the appeal of the Appellant sustaining the demand on new grounds which were not alleged in the show cause notice or the subsequent proceedings? - Held that - The Appeal requires admission. However, on our observing this, the Counsel for both the parties pray that the impugned order dated 12th April, 2016 can be set aside and restored to the Tribunal for fresh disposal, in accordance with law. The impugned order dated 12th April, 2016 is quashed and set aside. However, the Appellant s appeal be restored to the file of the Tribunal for fresh disposal - Appeal restored.

Summary

Issues:
1. Dismissal of appeal on new grounds not alleged in show cause notice.
2. Sustaining demand of service tax under Section 73A.
3. Tenability of show cause notice seeking to recover service tax for an extended period under Section 73(1).
4. Imposition of penalty under Section 77(2).

Analysis:

1. The appellant, engaged in providing taxable service of 'Renting of Immovable Property,' claimed deduction under Notification 24/2007 and Rule 6(4C) of the Service Tax Rules, 1994. Despite this, the appellant collected the full amount of service tax from clients, not restricting it to the amount paid to the Central Government as Service Tax.

2. A show cause notice was issued by the Respondent seeking to recover the excess service tax collected and retained by the Appellant under Section 73A(3) of the Act. The Appellant contended that the excess amount collected was returned to tenants by a cheque dated 3rd June, 2015. However, the Additional Commissioner confirmed the demand of Rs. 10.16 lakhs and imposed a penalty.

3. The Commissioner (Appeals) dismissed the Appellant's appeal, leading to further appeal to the Tribunal. The Tribunal, while acknowledging the return of the excess amount by the Appellant, upheld the Commissioner's order based on the assumption that the Appellant's client might have taken Cenvat Credit of the service tax shown in the invoice.

4. The High Court, upon considering the appeal, found it necessary to admit the case. Both parties agreed to set aside the impugned order dated 12th April, 2016, and requested the case to be restored to the Tribunal for fresh disposal in accordance with the law. Consequently, the High Court quashed the order and directed the appeal to be restored to the Tribunal for fresh disposal, leaving all contentions open for consideration.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal aspects involved in the case.