2025 (1) TMI 480 - AT - Service Tax

Recovery of service tax with interest and penalty - Renting of immovable property service - Mandap Keeper/ Renting of Community Centre service - Appellant is a Governmental Authority as defined by Notification No 25/2012-ST dated 20.06.2012 and thus exempted in terms of S No 39 of the Notification or not. Appellant is a Governmental Authority as defined by Notification No 25/2012-ST dated 20.06.2012 and thus exempted in terms of S No 39 of the Notification - HELD THAT - In the case of GREATER NOIDA INDUSTRIAL DEV. AUTHORITY VERSUS COMMR. OF CUS., C. EX. 2015 (4) TMI 1231 - ALLAHABAD HIGH COURT Hon ble Allahabad High Court has held ' Letting of immovable property for consideration, which is determined on the basis of offers received from public at large by the assessee Greater Noida Industrial Development Authority is a service provided for consideration and not on payment of statutory fees, neither it is a statutory service performed by the assessee. It may be that the statute permits such activities of letting out of immovable property for augmenting its finances but the same cannot be termed as the service in public interest nor it is a mandatory or statutory functions of the Development Authority. Accordingly such activity of leasing do constitute a taxable service.' Vague SCN - HELD THAT - There are no merits in the contention of the appellant that the show cause notice is vague etc., impugned order has specifically considered this issue and after examination of the said show cause notice concluded that there is no vagueness. Even otherwise till the time the show cause notice is able to communicate the allegations and reasons for the demand being made the same cannot be termed as vague. The show cause notice or in fact any document issued in course of transaction of Government business or in a judicial proceedings is not a document of literature but only means of communication. Till the time the person or whom the said document is issued is able to read and respond to the same, it cannot be termed as vague - there are no merits in the submissions made by the appellant to the effect that show cause notice dated 21.05.2014 has been issued quoting the obsolete provisions and hence bad in law. Taxability - mandap keeper service - renting of immovable property service - HELD THAT - It is found that even after the introduction negative list regime with effect from 01.07.2012 onwards the activities undertaken by the appellant fall within the definition of service as per the Section 65B (44) and are taxable being not in negative list or exempted it is not inclined to accept the submission of the appellant in this respect. Further impugned order after examination of the documents in respect of the Mandap Keeper Services have concluded that there is no evidence to the effect that these services were for the purpose of religious functions appellant have not countered the said findings by producing the relevant documents to show that these service were indeed rendered by them in respect of such religious ceremonies and functions. The reliance placed on the decisions in this respect is not correct as impugned order has recorded a finding of fact. Conclusion - i) The appellant failed to provide any evidence which may prove that the said community centres are given for religious activities. ii) The appellant is neither a Government Authority nor a local authority. iii) The extended period of limitation as envisaged under proviso to Section 73(1) of the Finance Act, 1994 has been correctly invoked in this case. Penalties u/s 78 set aside. iv) As appellant have failed to take registration and file the returns by the due date the penalties imposed under Section 77 upheld. Appeal allowed in part.

2007 (6) TMI 4 - SC

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in the judgment include:

Whether the appellant is liable to pay Service Tax under the category of "Renting of Immovable Property" and "Mandap Keeper Services" for the period 2008-09 to 2012-13.
Whether the appellant qualifies as a "governmental authority" and is thus exempt from Service Tax under Notification No. 25/2012-ST dated 20.06.2012.
Whether the extended period of limitation for the demand of Service Tax is applicable.
Whether the penalties imposed under Sections 77 and 78 of the Finance Act, 1994 are justified.
Whether the show cause notices issued were vague or invalid due to quoting obsolete provisions.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability to Pay Service Tax

Legal Framework: The relevant provisions include Section 65(105)(zzzz) of the Finance Act, 1994, which defines taxable services, and Section 73(1) for demand and recovery of Service Tax.
Court's Interpretation: The court upheld the demand for Service Tax, finding that the appellant provided taxable services under "Renting of Immovable Property" and "Mandap Keeper Services." The court noted that the appellant failed to register under Service Tax law or file returns.
Key Evidence: The court examined invoices and receipts that did not specify the purposes for which the community centers were booked, undermining the appellant's claim that services were for religious activities.
Application of Law: The court applied the provisions of the Finance Act, 1994, confirming the appellant's liability for Service Tax during the specified period.
Competing Arguments: The appellant argued that no Service Tax was due as the services were provided for religious functions, but the court found no evidence supporting this claim.
Conclusion: The appellant is liable to pay Service Tax for the services rendered.

Issue 2: Exemption as a Governmental Authority

Legal Framework: Notification No. 25/2012-ST exempts certain services provided by governmental authorities.
Court's Interpretation: The court concluded that the appellant does not qualify as a "governmental authority" since it failed to demonstrate 90% or more government participation or control.
Key Evidence: The appellant's claim of exemption under the notification was unsupported by evidence of governmental control.
Application of Law: The court applied the definition of "governmental authority" under the notification and found the appellant ineligible for exemption.
Competing Arguments: The appellant argued for exemption based on its establishment under a state act, but the court found this insufficient.
Conclusion: The appellant is not exempt from Service Tax under the cited notification.

Issue 3: Extended Period of Limitation

Legal Framework: Section 73(1) of the Finance Act, 1994, allows for an extended period of limitation in cases of fraud or suppression of facts.
Court's Interpretation: The court found that the extended period was not applicable as there was no deliberate suppression of facts by the appellant.
Key Evidence: The court noted the appellant's failure to register and file returns but did not find evidence of intentional evasion.
Application of Law: The court referenced precedents indicating that the extended period requires evidence of intent to evade tax.
Competing Arguments: The revenue argued for the extended period due to non-compliance, but the court required more substantive evidence of intent.
Conclusion: The extended period of limitation is not applicable; demands should be limited to the normal period.

Issue 4: Penalties Under Sections 77 and 78

Legal Framework: Sections 77 and 78 of the Finance Act, 1994, provide for penalties for non-compliance and evasion of Service Tax.
Court's Interpretation: The court upheld penalties under Section 77 for failure to register and file returns but set aside penalties under Section 78 due to the absence of willful evasion.
Key Evidence: The appellant's non-compliance with registration and filing requirements was undisputed.
Application of Law: The court applied Section 80, which allows for waiver of penalties if reasonable cause is shown, to Section 78 penalties.
Competing Arguments: The appellant argued against penalties due to retrospective amendments, but the court found this unpersuasive.
Conclusion: Penalties under Section 77 are upheld; Section 78 penalties are set aside.

Issue 5: Validity of Show Cause Notices

Legal Framework: Validity of notices under procedural rules and principles of natural justice.
Court's Interpretation: The court found the notices were not vague as they communicated the allegations and reasons for the demand.
Key Evidence: The court reviewed the content of the notices and found them sufficiently detailed.
Application of Law: The court emphasized the functional aspect of notices as means of communication.
Competing Arguments: The appellant claimed vagueness and obsolete provisions, but the court dismissed these claims.
Conclusion: The show cause notices are valid and enforceable.

3. SIGNIFICANT HOLDINGS

Core Principles Established: The court reaffirmed the applicability of Service Tax to renting and mandap services unless specific exemptions apply. It clarified the requirements for invoking the extended period of limitation and the circumstances under which penalties can be imposed.
Final Determinations: The appellant is liable for Service Tax for the period within the normal limitation. Penalties under Section 77 are upheld, while those under Section 78 are set aside. The appellant is not exempt as a governmental authority, and the show cause notices are valid.

Verbatim Quotes of Crucial Legal Reasoning:

"The appellant failed to provide any evidence which may prove that the said community centres are given for religious activities."

"The appellant is neither a Government Authority nor a local authority."

"The extended period of limitation as envisaged under proviso to Section 73(1) of the Finance Act, 1994 has been correctly invoked in this case."

"The show cause notice or in fact any document issued in course of transaction of Government business or in a judicial proceedings is not a document of literature but only means of communication."

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