2018 (12) TMI 261 - AT - Service Tax

Benefit of reduced penalty - Renting of Immovable Property Service - are collecting rent amount but they did not pay service tax on the said rent collected and also not filed ST-3 returns - Held that - It is a fact that the appellant had recovered the service tax from the lessee/tenant but did not deposit the same in the Government exchequer and kept it with themselves. Further, the appellant have not filed the requisite returns in time, therefore, the department could not ascertain the tax liability of the appellant. Further, the appellant have not complied with the order of the adjudicating authority in toto and has paid only the tax and the 25% penalty but subsequently, after some delay, paid the interest also. Therefore, they are not entitled to the benefit of reduced penalty under Section 78 of the Finance Act, 1994 - appeal dismissed - decided against appellant.

Summary

Issues:
1. Appeal against rejection of appeal by Commissioner (A) regarding service tax on renting of immovable property service.

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore was filed against the rejection of the appellant's appeal by the Commissioner (A) regarding the non-payment of service tax on renting of immovable property service. The appellant had rented out their plant premises to a company and collected rent without paying the corresponding service tax or filing ST-3 returns. A show-cause notice was issued demanding service tax, interest, and penalty. The Joint Commissioner confirmed the demand and imposed penalties. The appellant then appealed to the Commissioner (A), who also rejected the appeal, leading to the present appeal before the CESTAT.

During the hearing, the appellant's representative argued that the non-payment was due to financial difficulties, and they had paid the entire tax amount along with late fees and part of the penalty. They requested leniency, stating there was no intention to evade tax as it was reflected in their balance sheet. On the other hand, the respondent's representative contended that the appellant collected the service tax but did not deposit it, indicating an intent to evade payment. They argued against reducing the penalty under Section 78 of the Finance Act, 1994, as the appellant did not fully comply with the original authority's order.

After reviewing the submissions and evidence, the Tribunal found that the appellant had indeed collected service tax but failed to deposit it, leading to non-compliance with tax liabilities and return filing requirements. The Tribunal noted that the appellant only partially paid the penalty and interest after delays, not entitling them to the reduced penalty under Section 78. Consequently, the Tribunal upheld the impugned order rejecting the appellant's appeal, citing the appellant's failure to comply with tax obligations and orders, dismissing the appeal.

In conclusion, the Tribunal's decision emphasized the importance of timely tax payment, compliance with orders, and fulfilling tax liabilities to avoid penalties and legal consequences. The judgment serves as a reminder of the obligations and consequences associated with non-payment or evasion of service tax, highlighting the need for strict adherence to tax laws and regulations to maintain tax compliance and avoid penalties.