2017 (11) TMI 1181 - AT - Service Tax

Renting of Immovable Property Service - shops let out on the chemist - interest - penalty - Held that - The claim of the appellant is that they have paid a sum of ₹ 8,54,4009/- towards interest. The ld. AR disputed that the said amount is not towards interest. In that circumstances, the matters needs examination at the end of the adjudicating authority to ascertain the fact from the records whether the appellant paid service tax along with interest for the intervening period or not? - matter on remand. Penalty - Held that - the appellant had paid service tax on the direction of the Hon ble High Court of Punjab and Haryana and the matters is pending before the Hon ble Apex Court whether the levy of the service tax can be made against the appellant under the category of renting of immovable property service - no penalty is imposable on the appellant, therefore, by extending benefit of Section 80 of the Finance Act, 1994, the penalty imposed on the appellant in impugned order is set aside. Appeal allowed by way of remand.

Summary

Issues: Appeal against demand of interest and penalty on service tax payment for renting of immovable property service.

Analysis:
1. Levy of Service Tax: The appellant, a Government Medical College & Hospital, let out a property to a chemist for selling prescribed medicines. The Revenue claimed that service tax was due under Renting of Immovable Property Service. Proceedings were initiated against the appellant for non-payment of service tax, interest, and penalty. The appellant paid the service tax after a legal battle where the High Court directed them to make the payment.

2. Contentions: The appellant argued that they paid the service tax along with interest after receiving the show cause notice. They believed in good faith that they were not liable to pay the tax. The appellant sought the benefit under Section 80 of the Finance Act, 1994, and requested no penalty imposition.

3. Adjudication: The Adjudicating Authority confirmed the service tax demand, interest, and penalties. The appellant challenged this order, contending that the interest amount paid was disputed by the Revenue. The Tribunal found discrepancies in the interest payment and directed the Authority to verify if the full amount was paid.

4. Legal Proceedings: The appellant had paid the service tax based on the High Court's direction, pending a decision by the Apex Court on the levy of service tax for renting of immovable property service. Considering the ongoing legal uncertainty, the Tribunal held that no penalty should be imposed on the appellant.

5. Decision: The Tribunal set aside the penalty imposed on the appellant and remanded the matter to the Adjudicating Authority for verification of the interest payment. The appellant was directed to provide relevant documents for clarification. The appeal was disposed of accordingly, granting relief to the appellant under Section 80 of the Finance Act, 1994.