2016 (12) TMI 736 - AT - Service Tax

Levy of tax - benefit of SSI extended - whether the appellant is liable to discharge Service Tax liability under the category of renting of immovable property during the period 01.06.2007 to 30.09.2010? - Held that - We find that liability to pay tax on renting of immovable property service is not in dispute as appellant, though Municipal Corporation have leased their commercial property during the relevant period and collected rent. The Service Tax liability and interest thereof in accordance with law is upheld. However, the Service Tax liability needs to be reworked out and we do find force in the contention raised by the learned Counsel that for the first year, i.e. 01.06.2007 to 31.03.2008 benefit of small scale service provider exemption needs to be extended. For the entire period in question i.e. 01.06.2007 to 30.09.2010 benefit of cum-tax value needs to be extended to appellant. The lower authorities are directed to re-work out the service tax liability and interest thereof; the appropriated the amount already deposited by the appellant towards liability and the interest thereof. As regards penalties, we find that in appellant s own case in an identical issue, we have set aside the penalty invoking the provision of Section 80 of the Finance Act, 1994. We do not find any reason to deviate from such a view already taken. Accordingly by invoking the provision of Section 80, we set aside the penalty imposed on the appellant - appeal disposed off - decided partly in favor of assessee.

Summary

Issues: Service Tax liability under "renting of immovable property" from 01.06.2007 to 30.09.2010, applicability of small scale service provider exemption, consideration of cum-tax value, and penalty imposition.

Analysis:

1. Service Tax Liability under "Renting of Immovable Property":
The appeal addressed the issue of whether the appellant, a Municipal Council, is liable to discharge Service Tax under the category of "renting of immovable property" for the period from 01.06.2007 to 30.09.2010. It was established that the appellant had leased shops to commercial entities and collected rent, which falls under the taxable category. The Tribunal upheld the Service Tax liability and interest in accordance with the law.

2. Applicability of Exemptions:
The appellant's counsel argued that for the first year (01.06.2007 to 31.03.2008), the benefit of small scale service provider exemption should be extended. Additionally, for the entire period in question, the benefit of cum-tax value should apply. The Tribunal agreed with the counsel's contention and directed the lower authorities to rework the Service Tax liability, considering the exemptions. The amount already deposited by the appellant towards liability and interest was to be appropriately adjusted.

3. Penalty Imposition:
In terms of penalties, the Tribunal referred to a previous decision in the appellant's case where the penalty was set aside under Section 80 of the Finance Act, 1994. Following the same rationale, the Tribunal set aside the penalty imposed on the appellant in this instance as well. The decision was consistent with the view taken in the previous case regarding penalty imposition.

4. Final Disposition:
The appeal was disposed of with the directions to rework the Service Tax liability, apply exemptions, adjust the deposited amount, and set aside the penalty. The Tribunal pronounced the operative portion of the order in open court, concluding the judgment.

This comprehensive analysis of the judgment highlights the key issues addressed, the arguments presented by both sides, and the Tribunal's decision on each aspect, ensuring a detailed understanding of the legal implications and outcomes of the case.