2014 (12) TMI 1096 - HC - Service Tax

Waiver of pre deposit - Renting of immovable property - Held that - Appellant himself has admitted before the Adjudicating Authority that they would collect service tax from its users and remit the same. Hence, the appellant should not now raise a question that the lease was entered into long before the introduction of Section 65(105)(zzzz) of the Finance Act, 1994 and hence not liable to pay service tax. The appellant has not produced any material showing that they are suffering from financial hardship. - Following decision of P.K.Hospitality Services Ltd. V. UOI reported in 2014 (8) TMI 820 - Supreme Court of India - appellant is directed therein to pay the arrears in equated monthly instalments - stay denied.

Summary

Issues:
1. Applicability of service tax on renting of immovable property.
2. Imposition of penalty and interest under the Finance Act, 1994.
3. Tribunal's order for pre-deposit of tax amount.

Analysis:
1. The case involved the applicability of service tax on renting of immovable property by a Municipality. The Department contended that the Finance Act, 2010, amended the definition of taxable service to explicitly include "renting" as a taxable service, with retrospective effect from 01.06.2007. A show cause notice was issued to demand service tax, interest, and penalty. The Adjudicating Authority confirmed the demand, leading to an appeal before the Tribunal challenging the order.

2. The Adjudicating Authority confirmed the demand of service tax, interest, and penalty on the Municipality under the Finance Act, 1994. The penalty was imposed under Section 78 of the Act, with an option to pay a reduced penalty if the entire outstanding amount was settled within a specified period. Additionally, a penalty under Section 77 of the Act was also imposed.

3. The Tribunal, after hearing both parties, directed the Municipality to pre-deposit a specific amount within a set timeframe, with the balance dues being waived upon compliance. The Municipality appealed this order before the High Court, questioning the Tribunal's imposition of the pre-deposit condition for the disputed tax levy, especially considering the retrospective application of the service tax from 2007.

4. The High Court, after considering submissions from both sides, upheld the Tribunal's order for pre-deposit but modified the payment terms. The Court directed the Municipality to deposit the amount in six equal monthly instalments starting from January 2015. Failure to pay any instalment on time would allow the Tribunal to take necessary legal action. This decision aligned with a Supreme Court precedent where arrears of service tax were to be paid in instalments.

In conclusion, the High Court's judgment addressed the issues of service tax applicability, penalty imposition, and the Tribunal's order for pre-deposit, providing a detailed analysis and modifying the payment terms in line with legal precedents.