2015 (6) TMI 84 - HC - Service Tax

Waiver of pre deposit - renting of immoveable property service - Held that - Renting of immoveable property had been brought in to the service net w.e.f. 01.06.2007 vide notification dated 22.05.2007. The explanation to Section 65(90a) of the Finance Act provide that renting of immoveable property includes use of immoveable property, factories, office buildings, warehouses plus for use in the course or furtherance of business or commerce. Sub-section (105)(zzzz) also provides that taxable service means providing of any service by renting of immoveable property The argument that as per the amended lease deed dated 29.03.2011, the building was only let out for ₹ 55,000/- per month and the rest of the amount was only on account of the rent of the immoveable plant and machinery, which was moveable and not covered under the Act, prima facie, cannot be accepted. The Adjudicating Authority has noticed that a consolidated ledger account is being maintained and that there is no breakup for the different heads of land and building and the plant machinery and the agreement dated 29.03.2011 was not registered under the Registration Act, 1908. Court is not inclined to interfere with the discretion which has been exercised and where the benefit of pre-deposit has been restricted to a reasonable amount, in favour of the appellant. However, since an interim order had been passed in favour of the appellant on 24.12.2014 that the appellant would deposit a sum of ₹ 8 lacs towards service tax, which is stated to have been deposited, liberty is granted to the appellant to deposit the balance outstanding amount within a period of 2 months, from the date of this order. - Decided partly in favour of assessee.

Summary

Issues:
1. Appeal against order refusing to interfere in pre-deposit on service tax amount.
2. Questions of law: Justification of depositing entire adjudicated service tax, perversity of Tribunal's order, appellant's strong prima facie case.
3. Whether renting of immoveable property falls under service tax.
4. Discretion exercised by Commissioner (Appeals) regarding pre-deposit.

Analysis:
1. The appeal challenged the Tribunal's order refusing to interfere in the pre-deposit of the service tax amount during the pendency of the appeal. The questions of law raised included the justification for depositing the entire adjudicated service tax, the alleged perversity of the Tribunal's order, and the appellant's contention of having a strong prima facie case.

2. The Tribunal based its decision on the reasoning that the rent note executed by the appellant indicated that the property, including building, plant, and machinery, was rented out, falling within the ambit of renting of immoveable property and thus subject to service tax.

3. The case involved a show cause notice issued to the appellant for depositing service tax along with interest due to leasing out plant and machinery, where the appellant was found liable for a significant amount of service tax, penalties, and interest. The Adjudicating Authority's order confirmed the service tax liability, penalties, and interest due to non-registration and violation of relevant sections.

4. The appellant appealed to the Commissioner (Appeals) seeking waiver of penalties but was directed to pay the entire confirmed service tax amount. The Commissioner (Appeals) considered the appellant's arguments but found no undue hardship to warrant a waiver of the pre-deposit requirement. The appellant then challenged this decision before the Tribunal.

5. The Court analyzed the provisions of Section 35F of the Act, highlighting the requirement of depositing duty demanded or penalty levied pending appeal, with provisions for dispensation in cases of undue hardship. The Court also considered the definition of renting of immoveable property under the Finance Act.

6. The Court found that the appellant's arguments regarding the lease deed and division of rent between land/building and plant/machinery were not convincing. The Court upheld the Commissioner (Appeals) decision, emphasizing that the authorities detected the tax evasion based on audits and extended the period of limitation.

7. Ultimately, the Court dismissed the appeal, stating that the substantial questions of law raised did not warrant interference in the pre-deposit order. The appellant was granted liberty to deposit the outstanding balance within a specified timeframe.

8. The judgment provides a detailed analysis of the issues raised, the legal provisions involved, and the Court's reasoning in upholding the decisions of the lower authorities regarding the pre-deposit of service tax.