2020 (11) TMI 284 - AT - Service Tax

Refund of Service Tax - constitutional validity of levy of service tax is sub-judice before the Hon ble Apex Court - renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance, of business or commerce - HELD THAT - By placing reliance on the reference made to nine Judges Bench in the case of MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS 2011 (3) TMI 1554 - SUPREME COURT , the Hon ble Supreme Court in the case of UNION OF INDIA AND ORS. VERSUS UTV NEWS LTD. 2018 (5) TMI 1367 - SUPREME COURT were pleased to defer the matter till disposal of the issues pending before such Constitutional Bench. Since the constitutional validity of the issue of levy of service tax on the disputed service is sub-judice before the Hon ble Apex Court, we are of the considered view that the present appeal filed by the appellant cannot be taken up for a decision on merits at this juncture and the matter should be remanded to the original authority for deciding the issue of leviability of service tax on the disputed taxable service along with other issues, after disposal of the Special Leave Petitions (SLPs)pending before the Constitutional Bench of Hon ble Supreme Court in the case of Mineral Area Development Authority ors. The matter is remanded to the original authority for re-adjudication of the matter, on the basis of the subject issue to be decided by the Hon ble Supreme Court.

Summary

Issues:
1. Constitutional validity of levy of service tax on renting of immovable property.
2. Rejection of refund application due to pending constitutional validity issue before the Supreme Court.

Analysis:
1. The appellant, engaged in providing taxable service under "Renting of Immovable Property," filed a refund application during the disputed period, claiming refund based on a licensee's interim relief from service tax payment. The refund application was rejected for lack of supporting documents and proof of tenant payments. On appeal, the Ld. Commissioner (Appeals) rejected the appeal citing the sub-judice status of the constitutional validity of service tax levy before the Hon'ble Apex Court.

2. The legislative competence of Union Parliament for levy of service tax on renting of immovable property was challenged before the Supreme Court. Referring to a previous case, the Supreme Court deferred the matter pending disposal of issues before a Constitutional Bench. Considering the sub-judice status of the constitutional validity issue, the Appellate Tribunal concluded that the appeal cannot be decided on merits at the moment. The matter was remanded to the original authority for re-adjudication post the Constitutional Bench's decision.

3. The Appellate Tribunal set aside the impugned order and remanded the matter to the original authority for re-adjudication based on the subject issue pending before the Hon'ble Supreme Court. The decision highlighted the importance of awaiting the Supreme Court's ruling on the constitutional validity of the levy of service tax on the disputed taxable service before making a final determination on the refund application.