2023 (7) TMI 206 - AT - Service Tax

Waiver of interest and penalty - Leviability of Service Tax on Renting of Immovable Property Services - constitutional validity of amendment giving retrospective effect from 01/06/2007 - HELD THAT - This is a case where a retrospective amendment was made to the definition of Renting of Immovable Property Service in order to clarify the legislative intent and also bring in certainty in tax liability. The amendment clarified that the activity of renting of immovable property per se would also constitute a taxable service under the relevant clause. It was given retrospective effect from 01.06.2007. It is found that no provision of time has been made in the present amendment for payment of retrospectively assessed duty. Hence, the interest would be in the nature of a quasi-punishment and is not payable by the appellant. This is based on the well settled principle of constitutional law that sovereign legislative bodies can make laws with retrospective operation however no ex post facto penalty is permissible. In the light of the same no penalty is also payable by the appellant. Hence the appellant is liable for waiver of interest and penalty. The Hon ble Tribunal s judgment in M/S COAL MINES PROVIDENT FUND ORGANISATION VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RANCHI 2020 (2) TMI 1493 - CESTAT KOLKATA cited by Revenue is not on an issue related to demands based on retrospective amendment to a legislation and is distinguished, moreover it will have to give way to a judgement of the Apex Court on the matter. The interest and penalties confirmed in the impugned order set aside - appeal disposed off.

Summary

Issues:
The appeal involves the question of service tax liability on "Renting of Immovable Property Service" for the period from 1.4.2010 to 31.3.2011, specifically focusing on the sustainability of the demand, interest, and penalty imposed.

Issue 1: Service Tax Liability on Renting of Immovable Property Service

The original authority confirmed the demand for duty based on the constitutionally valid leviability of Service Tax on Renting of Immovable Property Services, citing a relevant High Court decision. The appellant argued that the liability to pay interest and penalty should not arise in the case of a retrospective legislation, relying on a Supreme Court judgment. The Tribunal noted a retrospective amendment clarifying the tax liability on renting of immovable property and held that interest and penalty were not payable in such cases. The appellant's prayer to waive the interest and penalties was allowed, and the impugned order was partly modified accordingly.

Issue 2: Interpretation of Legislative Intent

The Tribunal highlighted the retrospective amendment made to the definition of 'Renting of Immovable Property Service' to clarify the legislative intent and ensure certainty in tax liability. The amendment aimed to tax the commercial use of immovable property hired on rent and was given retrospective effect from 01.06.2007. The Tribunal emphasized that interest and penalties were not payable in cases where retrospectively assessed duty was involved, as per established legal principles. The appellant's argument was supported by references to relevant case law and the Tribunal's analysis led to the waiver of interest and penalties in this case.

Separate Judgment by the Judges:
The judgment was pronounced by SHRI P. DINESHA, MEMBER (JUDICIAL) AND SHRI M. AJIT KUMAR, MEMBER (TECHNICAL) on 5.7.2023.