2019 (4) TMI 442 - AT - Service Tax

Benefit of N/N. 6/2005-ST dated 1.3.2005 - renting of immovable property service - benefit denied on the ground that appellant started payment of service tax suo motto at the beginning of the financial year 2007-08, as soon as the tax was imposed on the renting of immovable property service - Held that - The option of exercising to avail the exemption was not originally exercised but was exercised by filing a revised return. This cannot come in the way of eligible benefit to the appellant. Further, it is seen that the total rent received by him for the two properties owned by him for the period June 2007 to March 2008 works out to less than ₹ 8,00,000/- - benefit cannot be denied - appeal allowed - decided in favor of appellant.

Issues:
1. Eligibility for threshold exemption under Notification No.6/2005-ST dated 1.3.2005.
2. Applicability of service tax on renting of immovable property service.
3. Validity of revised ST-3 returns.
4. Interpretation of the option clause in the notification.
5. Calculation of total rent received for exemption eligibility.

Eligibility for Threshold Exemption:
The appellant, a shop owner in Mysore, was levied service tax for renting immovable property from June to September 2007. Initially, he paid the tax without claiming the threshold exemption under Notification No.6/2005. Upon realizing his eligibility, he filed revised ST-3 returns within the stipulated period, declaring 'nil' tax liability. The department contended that since the appellant started paying tax suo motto, he forfeited the exemption. However, the Tribunal observed that the appellant rectified the omission promptly by filing revised returns, and his total rental income for the period was below the threshold limit. Consequently, the impugned order was set aside, and the appeal allowed.

Applicability of Service Tax:
The appellant, a law-abiding citizen, promptly paid service tax on renting immovable property upon notification. He later discovered his entitlement to the threshold exemption and filed revised returns within the prescribed timeframe. The department argued against granting the exemption due to the appellant's initial payment of tax. However, the Tribunal noted the appellant's proactive measures and rectification through revised returns, ultimately determining his eligibility for exemption based on total rental income.

Validity of Revised ST-3 Returns:
The appellant, upon realizing his eligibility for exemption under Notification No.6/2005, filed revised ST-3 returns for the period in question, declaring 'nil' tax liability. The department opposed this, citing the appellant's initial payment of tax. However, the Tribunal considered the timely filing of revised returns as a valid rectification of the omission, allowing the appellant to claim the exemption.

Interpretation of Option Clause in the Notification:
The Notification No.6/2005 contained an option clause that once exercised in a financial year, cannot be withdrawn. The appellant initially did not claim the exemption but later exercised this option by filing revised returns. The Tribunal interpreted this as a valid exercise of the option, enabling the appellant to benefit from the exemption despite the initial omission.

Calculation of Total Rent Received for Exemption Eligibility:
The appellant presented a detailed table of rental income for two properties in Mysore from June 2007 to March 2008, demonstrating that the total income fell below the threshold limit for exemption eligibility. This evidence supported the appellant's claim for exemption, which was upheld by the Tribunal based on the total rental income calculation.

This comprehensive analysis of the judgment addresses all the issues involved, providing detailed insights into the Tribunal's decision-making process and legal interpretation.

← Previous Next →