2017 (5) TMI 891 - AT - Service Tax

Renting of immovable property service - demand - case of appellant is that since the Central Bank of India has already paid the service tax the demand should be reduced to that extent - Held that - on the rent paid by the Central Bank of India against the premises, the bank was discharging the service tax - I do not agree with the lower authorities rejection of this claim of the appellants only on the ground that letter is not sufficient to prove the payment of service tax. If the lower authority has any doubt on this letter, he could have asked report from the Jurisdictional service tax department of the bank whether the payment of service tax shown as paid by the bank is correct or otherwise - the demand must be reduced to the extent of the service tax paid by the Central Bank of India. The matter is remanded to the original authority to requantify the service tax demand by reducing the service tax paid by the Central Bank of India - appellant deserves the waiver of penalty by invoking Section 80 - appeal allowed by way of remand.

Summary

Issues:
1. Service tax demand on renting of immovable property
2. Appropriation of already paid amount
3. Penalties imposed under Sections 76 and 78
4. Appeal against Order-in-Original
5. Appeal before Commissioner (Appeals)
6. Reduction of confirmed amount
7. Penalty waiver under Section 18
8. Discharge of service tax by Central Bank of India
9. Rejection of plea based on Central Bank of India's letter
10. Remand for re-quantification of demand

Analysis:
The appellant, engaged in renting immovable property, faced a service tax demand for the period April 2010 to March 2011. The confirmed amount was initially &8377; 7,19,057, with &8377; 3,83,160 already paid and penalties imposed under Sections 76 and 78. The Commissioner (Appeals) modified the order, reducing the confirmed amount to &8377; 3,35,897 and setting aside the penalty under Section 76. The appellant, aggrieved by this, filed the present appeal challenging the Order-in-Appeal.

During the appeal, the appellant argued that the Central Bank of India, a recipient of the rental service, was paying service tax regularly. They presented the agreement and a letter from the bank confirming this. The adjudicating authority rejected this claim, leading to the appeal. The appellant also sought penalty waiver under Section 18, citing a genuine belief that the service tax liability rested with the recipient, Central Bank of India.

The Assistant Commissioner representing the revenue reiterated the findings of the impugned order. However, the Member (Judicial) disagreed with the lower authorities' rejection of the appellant's claim based on the Central Bank of India's letter. The Member found that the bank was indeed discharging the service tax, and the demand should be reduced by the amount paid by the bank. The matter was remanded to the original authority for re-quantification based on this reduction.

Furthermore, considering the appellant's genuine belief and the reasonableness of their understanding regarding the service tax liability, the Member invoked Section 80 to set aside the penalty imposed under Section 78. The impugned order was modified accordingly, and the case was remanded for re-quantification of the demand in line with the findings.

In conclusion, the judgment favored the appellant by acknowledging the Central Bank of India's payment of service tax, leading to a reduction in the demand and the waiver of the penalty under Section 78 due to the appellant's bonafide belief.