2014 (11) TMI 127 - HC - Service Tax

Waiver of pre deposit - renting versus lease premium - renting of immovable property - assessee relied upon the decision in the case of Noida Industrial Development Authority 2014 (9) TMI 306 - CESTAT NEW DELHI - Held that - the levy could be on the quantum of rent received by such authority month to month or year to year or whether it would also include a tax leviable, if any, on a lump sum amount received as premium. The final view of the Principal Bench of the Tribunal is the service tax is leviable on the quantum of lease and not on the lease premium. The premium is a one time lump sum payment whereas the lease comes into effect and as an interest created in the immovable property on payment of the rent. That is not rent according to the Tribunal s final order. In such circumstances, while reserving any opinion on the correctness of this view, what we find is that the point at this stage appears to be prima facie covered in favour of the Appellant Assessee - Stay granted.

Summary

Issues: Challenge to interim order of Tribunal regarding pre-deposit of Rs. 20 Crores under Central Excise Act, 1994 and Finance Act, 1994.

The judgment by the Bombay High Court involved an Appeal challenging an interim order of the Tribunal regarding the pre-deposit of Rs. 20 Crores. The Court admitted the Appeal based on the substantial question of law related to the justification of the pre-deposit under section 35F of the Central Excise Act, 1994 read with section 83 of the Finance Act, 1994. The Appellant argued that being a State undertaking, its dues were secured, especially after a similar case was decided in favor of an Assessee by the Tribunal. The Appellant contended that the Tribunal should have granted an unconditional stay and waiver of pre-deposit. On the other hand, the Respondent argued that the order directing the deposit was fair considering the total demand amount. The Court analyzed the interpretation of the term "Taxable Service" under the Finance Act, 1994, specifically regarding the levy of service tax on renting immovable property. The Court noted that the Tribunal's final view was that service tax is leviable on the quantum of lease and not on the lease premium. Therefore, the Court found that the point appeared to be prima facie covered in favor of the Appellant Assessee. Consequently, the Court allowed the Appeal, setting aside the impugned order, and granted a waiver of the pre-deposit condition and an unconditional stay of recovery during the Appeal's pendency before the Tribunal.