2023 (9) TMI 1095 - AT - Service Tax

Non-payment of service tax - receipt of advance payment of rent - It is the submission of the appellant that as the appellant has paid the service tax while providing services to the service recipient, no differential service tax or interest is payable by the appellant - HELD THAT - Prior to 01.06.2007, no service tax is payable under the category of Renting of Immovable Property Service , therefore, for rent received by the appellant for the period prior to 01.06.2007 in respect of all the three properties, the appellant is not liable to pay service tax. With regard to the property situated at 25A,Shakespeare Sarani, Kolkata-700017, it is found that although the appellant has received the rent in advance, but started paying service tax as and when they provided the services. Therefore, as they have paid the service tax thereon, the demand of service tax is not sustainable against the appellant, which is evident from the record placed - for the premises at 106, Diamond Harbour Road, Kolkata-700023 and 114/1A, Cotton Street, Kolkata-700020, the same parts of the premises were rented out for residential used for which, no service tax is payable for the amount received towards under the category of Renting of Immovable Property Service for residential purposes, therefore, no service tax is payable. Whatever property was rented out for business purposes, on which no service tax is paid by the appellant, the same is payable along with interest - the penalty imposed is waived - Appeal disposed off.

Summary

Issues involved:
Challenge of confirmation of demand of service tax on rent received under "Renting of Immovable Property Service".

Details of the judgment:

Issue 1: Service tax demand on rent received for three properties

The appellant challenged the confirmation of demand of service tax on rent received for three properties. The appellant had received advance payment of rent for various periods and the authorities alleged non-payment of service tax. The appellant argued that they had paid service tax while providing services and no differential tax or interest was payable. The Tribunal found that no service tax was payable for rent received prior to 01.06.2007 for all three properties. For the property at 25A, Shakespeare Sarani, although rent was received in advance, service tax was paid when services were provided, making the demand unsustainable.

Issue 2: Service tax liability for residential and business purposes

Regarding the properties at 106, Diamond Harbour Road, and 114/1A, Cotton Street, the Tribunal noted that parts of the premises were rented out for residential purposes, for which no service tax was payable under the category of "Renting of Immovable Property Service". The appellant was not liable to pay service tax from 01.04.2008 onwards as the properties were transferred to separate entities by a High Court order. However, any property rented out for business purposes, on which no service tax was paid, would be payable along with interest.

Issue 3: Penalty waiver under Section 80 of the Finance Act, 1994

Considering the circumstances and observations made, the Tribunal invoked Section 80 of the Finance Act, 1994, to waive the penalty imposed on the appellant. The appeal was disposed of with these observations.

Separate Judgment:
No separate judgment was delivered by the Judges in this case.