2017 (7) TMI 852 - HC - Service Tax

Renting of Immovable Property Service - whether the respondents could demand Service Tax, as mentioned in the impugned order? - Held that - there is no discussion as to the payment effected by the petitioner and no finding has been rendered by the first respondent on the said aspect. Thus, it is clear that the impugned order has been passed without appropriate application of mind. Even after the impugned order was served on the petitioner, the petitioner submitted a representation on 20.10.2016 reiterating his earlier stand and requested for rectification of the mistake by enclosing the copies of the challans, work sheet etc., Inspite of such representation, once again, the first respondent has stated that there is no error in the Order-in-Original calling for rectification. If respondents 1 and 2 are unable to reconcile the accounts in their office, it shows the manner in which the office administration is taking place. This Court is fully convinced that the petitioner has been harassed by the Department by passing the impugned order - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to Order-in-Original demanding Service Tax, interest, and penalties for renting of immovable property service.

Analysis:
The petitioner contested an Order-in-Original demanding payment of Service Tax on renting of immovable property service for a specific period. The court acknowledged the availability of an alternative appeal remedy but proceeded due to certain reasons. The central issue was whether the respondents were justified in demanding the Service Tax. The petitioner owned two properties, having remitted the tax for one property but disputed the liability for the other. The petitioner's statement indicated partial payment due to the lessee's non-compliance, with subsequent assurance of settling dues. Despite the petitioner's submission of payment evidence, a Show Cause Notice was issued, leading to the impugned order. The court noted the lack of discussion on the payment aspect in the order, highlighting a failure in due diligence. The petitioner's subsequent representations were disregarded, with the first respondent maintaining the tax demand without acknowledging payments.

The counter affidavit revealed discrepancies between the petitioner's payments and the department's demands, indicating a lack of reconciliation within the Service Tax Commissionerate. The court criticized the arbitrary nature of the impugned order, emphasizing the department's failure to address payment discrepancies adequately. Noting that the petitioner's payments exceeded the demanded amount, the court concluded that the petitioner had been unfairly targeted by the department. Consequently, the court quashed the impugned order, ruling in favor of the petitioner and closing the case without costs.