2018 (1) TMI 760 - AT - Central Excise

Liability of Service Tax - Renting of Immovable Property Services - benefit of N/N. 6/2005-ST dt.1.3.2005 - Held that - the Renting of Immovable Property Services is not rendered by the firm and the same cannot be clubbed with the services rendered by the firm - demand set aside. Penalty - Held that - it was an interpretational issue as to whether the renting services rendered by them in their individual capacity can be clubbed together with that of the services rendered by them as partners of the firm - the levy of penalty is unwarranted. Appellant has discharged the entire service tax liability in regard to Mandap Keeper Service and is not contesting this demand, penalty on this issue set aside. Appeal allowed in part.

Summary

Issues:
1. Liability of service tax under Mandap Keeper Services and Renting of Immovable Property Services.

Analysis:
The appeal was filed challenging the demand of service tax under the categories of Mandap Keeper Services and Renting of Immovable Property Services. The appellant, a partnership firm, was registered under the Mandap Keeper Services category but stopped paying service tax claiming exemption under Notification 6/2005-ST. The investigation revealed that the firm was also providing Renting of Immovable Property Services, exceeding the threshold limit for tax liability. A Show Cause Notice was issued, and after adjudication, the demand was confirmed. The Commissioner (Appeals) upheld the demand, except for setting aside the penalty under Section 76 of the Finance Act, 1994. The appellant contended that the Renting of Immovable Property Services were provided by the daughters of the owners individually, not by the firm. The income tax returns supported this claim, showing income from Mandap Keeper Services assessed as firm income and income from property renting assessed individually. The Tribunal agreed, setting aside the demand for Renting of Immovable Property Services.

Regarding the penalty imposed for Mandap Keeper Services, the appellant argued that they believed their services were within the threshold limit and not taxable. The issue of whether the services rendered individually by the daughters could be clubbed with those provided by the firm was also raised. The Tribunal found the penalty unwarranted due to the interpretational issue and the firm's bonafide belief. Consequently, the penalty for Mandap Keeper Services was set aside. The impugned order was modified to set aside the demand for Renting of Immovable Property Services and the penalty for Mandap Keeper Services. The appeal was partly allowed based on these findings.