2018 (10) TMI 561 - AT - Service Tax

Cum-tax benefit - case of appellant is that they had not collected the service tax and therefore they have to be given cum-tax benefit - abatement for property tax under N/N. 24/2007-ST dated 22.5.2007 - Held that - It is brought out that the appellant had put forward cum-tax benefit and the same has not been considered by the authorities below stating that the appellant has not furnished evidence. The ld. counsel has submitted that though necessary documents / bills were produced before the adjudicating authority, the same was not considered. That the appellant is ready to furnish the necessary documents again if a chance is given to them - the issue whether the appellant is eligible for cum-tax benefit requires to be remanded to the adjudicating authority for fresh consideration. Benefit of SSI exemption under N/N. 6/2005-ST dated 1.3.2005 - Held that - This aspect also requires reconsideration by the adjudicating authority. It is also seen from the records that the appellant has not been given the abatement for the property tax under Notification No.24/2007-ST dated 22.5.2007. The adjudicating authority shall also consider this plea of the appellant if sufficient proof is adduced by the appellant. Penalties - Held that - The issue whether renting of immovable property is subject to levy of service tax was under litigation during the disputed period and there were litigations filed by the tenants pending before the various High Courts - The issue is still pending before the Hon ble Supreme Court - penalties do not sustain. Appeal allowed in part.

Summary

Issues:
1. Appellant aggrieved by demand of service tax, interest, and penalties.
2. Eligibility for exemption under Notification No. 6/2005-ST.
3. Cum-tax benefit and abatement for property tax under Notification No.24/2007-ST.
4. Consideration of penalties under Section 77 and 78 of the Finance Act, 1994.

Issue 1:
The appellant contested the demand of service tax, interest, and penalties confirmed by the adjudicating authority and upheld by the Commissioner (Appeals). The appellant acknowledged the liability to pay service tax under renting of immovable property service for the period from 1.6.2007 to 30.9.2011. However, the appellant argued for exemption under Notification No. 6/2005-ST for the first year of the disputed period and claimed cum-tax benefit. The appellant also raised the issue of non-receipt of abatement for property tax under Notification No.24/2007-ST. The appellant requested the waiver of penalties invoking Section 80 of the Finance Act, 1994, citing the confusion surrounding the levy of service tax on renting of immovable property during the disputed period.

Issue 2:
The appellant sought reconsideration of the eligibility for exemption of ?8 lakhs under Notification No. 6/2005-ST for the initial year of the disputed period. The Tribunal noted that the appellant had not been given the abatement for property tax under Notification No.24/2007-ST and directed the adjudicating authority to consider this plea if sufficient proof is provided by the appellant.

Issue 3:
Regarding cum-tax benefit, the appellant's claim was not considered by the authorities below due to the alleged lack of evidence. The appellant contended that necessary documents were submitted but not evaluated. The Tribunal, after reviewing the submissions, decided to remand the issue of cum-tax benefit to the adjudicating authority for fresh consideration. The appellant expressed readiness to furnish the required documents again if given an opportunity.

Issue 4:
The appellant requested the waiver of penalties under Sections 77 and 78 of the Finance Act, 1994. The Tribunal observed that the issue of whether renting of immovable property was subject to service tax was under litigation during the disputed period, with cases pending before various High Courts and the Supreme Court. Citing precedents, the Tribunal concluded that the penalties imposed could not be sustained and set them aside. The matter was remanded to the adjudicating authority for reconsideration of the issues discussed.

In conclusion, the Tribunal partly allowed the appeal and partly remanded it for further consideration. The penalties imposed under Sections 77 and 78 of the Finance Act, 1994 were set aside, and the adjudicating authority was directed to reevaluate the issues related to cum-tax benefit, exemption under Notification No. 6/2005-ST, and abatement for property tax under Notification No.24/2007-ST.