2023 (10) TMI 320 - AT - Service Tax

Non-levy of penalties that were proposed in the Show Cause Notice - Dindigul Municipality was unaware of the levy of Service Tax on renting of immovable property - no intentional evasion of payment of Service Tax - lapse was due to unawareness - HELD THAT - The facts on record clearly reveal hat the assessee having approached the Hon'ble High Court in MADURAI CORPORATION, REP. BY COMMISSIONER ARIGNAR ANNA MALIGAI VERSUS THE COMMISSIONER OF CENTRAL EXCISE, MADURAI 2020 (9) TMI 1303 - MADRAS HIGH COURT , had also urged these very grounds and has obtained a common order whereby the leviability has been upheld. In view of the above High Court Order, the above grounds do not survive and the same may not require a separate order by this Bench since there has already been an order by the Hon ble High Court. There are no merit in the appeal filed by the Revenue - appeal dismissed.

Summary

Issues involved:
The issues involved in this case are the non-levy of penalties under Sections 76, 77, and 78 of the Act, related to Service Tax on renting of immovable property service, and the grounds raised in the cross-objection regarding unawareness of the levy of Service Tax and intentional evasion of payment.

Issue 1: Non-levy of Penalties
The Revenue filed an appeal against the Order-in-Original upholding proposed demands for Service Tax on renting of immovable property service but dropping the proposed penalties. The Additional Commissioner argued that non-levy of penalties was not justified as the assessee had not paid the tax demand. However, the Advocate for the Respondent referred to a judgment of the Madras High Court which set aside penalties on municipal corporations for the same activity, stating that no Government body could be imputed with the intent to commit fraud. The Tribunal noted that the chargeability to Service Tax by the Municipal Corporation had been settled by the High Court, and the issue in this appeal was solely regarding penalties. The Tribunal found no merit in the Revenue's appeal, citing the High Court's decision to set aside penalties in favor of the taxpayer.

Issue 2: Grounds raised in Cross-objection
The appellant raised grounds in its cross-objection, stating that the Municipality was unaware of the levy of Service Tax, there was no intentional evasion, and the lapse was due to unawareness. However, the Tribunal observed that the High Court had already upheld the leviability of Service Tax based on the same grounds raised by the appellant. Therefore, the Tribunal concluded that these grounds did not survive for a separate order by the Bench, as there was already a decision by the High Court on the matter.

In conclusion, the Tribunal dismissed the Revenue's appeal, stating that the chargeability to Service Tax by the Municipal Corporation had been settled by the High Court, and the issue in this appeal was limited to the non-levy of penalties. The Tribunal found no merit in the appeal and upheld the decision to drop the proposed penalties, in line with the High Court's judgment on similar cases involving municipal corporations.