2014 (12) TMI 1004 - AT - Service Tax

Waiver of pre-deposit of service tax - renting of immovable property service - applicant contend that they had already paid the service tax under the renting of immovable property on the rent received by the applicant - However, Revenue wants to levy service tax even on the deposit received by the applicant in respect of shops under the rent of immovable property service - Held that - prima facie as Revenue wants to levy service tax under the category of renting of Immovable property service on the deposit received by the applicant, hence the applicant had made out a strong case for waiver of pre-deposit. The pre-deposit of the remaining dues is waived and recovery thereof stayed for hearing of the appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax, interest, and penalty on renting of immovable property service.

Analysis:
The applicant filed an application seeking waiver of pre-deposit of service tax amounting to Rs. 91,82,801, along with interest and penalty. It was noted that the applicant had already paid a portion of the amount, totaling Rs. 12,21,503, along with interest of Rs. 5,54,256. The crux of the matter revolved around the disagreement between the applicant and the Revenue regarding the levy of service tax on the deposit received by the applicant in relation to the renting of immovable property service. The applicant argued that the service tax was already paid on the rent received, while the Revenue contended that the tax should also be levied on the deposit, which was significantly higher than the monthly rent. The applicant presented a resolution from the Agricultural Produce Market Committee outlining the terms of renting the shops. The Revenue highlighted that the interest-free deposit exceeded the monthly rent substantially, justifying the demand for service tax.

Upon considering the arguments, it was observed that the applicant's case for waiver of pre-deposit was strong as the Revenue sought to levy service tax on the deposit received. The Tribunal acknowledged that the tenant was entitled to the return of the deposit at the end of the lease period or upon termination of the lease agreement. Consequently, the Tribunal granted the applicant's request for waiver of pre-deposit for the remaining dues and stayed the recovery process pending the appeal hearing. The stay petition was allowed, providing temporary relief to the applicant while the appeal was being heard.

In conclusion, the Tribunal's decision to grant the waiver of pre-deposit and stay the recovery of the remaining dues was based on the prima facie assessment that the applicant had a compelling case against the levy of service tax on the deposit received in the context of renting immovable property service. The resolution passed by the Agricultural Produce Market Committee and the understanding of the deposit as distinct from rent played pivotal roles in the Tribunal's decision to provide interim relief to the applicant.