2018 (10) TMI 658 - AT - Service Tax

Renting of immovable property Service - Abatement of Property tax - rent due for the period prior to 01.06.2007 was received by them later in 2011 and this has been included for raising the demand - penalties - Held that - Both these pleas require to be verified by the adjudicating authority - both these issues have to be remanded to the adjudicating authority for fresh consideration. Penalties - Held that - During the impugned period, the issue whether Renting of Immovable Property is subject to levy of service tax, was under litigation - Being an interpretational issue, the levy of penalty under Section 78 of the Act ibid., cannot sustain and requires to be set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Benefit of abatement of property tax for the period 2008-09.
2. Inclusion of rent due for the period prior to 01.06.2007 in the demand.
3. Imposition of penalties under Section 78 of the Finance Act, 1994.

Analysis:

Issue 1: Benefit of abatement of property tax for the period 2008-09
The appellant argued that the adjudicating authority did not grant them the benefit of abatement of property tax paid for the period 2008-09. The appellant's counsel contended that this plea, along with evidence, was not considered. The Tribunal found merit in this argument and decided to remand this issue to the adjudicating authority for fresh consideration.

Issue 2: Inclusion of rent due for the period prior to 01.06.2007 in the demand
The appellant received rent for the period prior to 01.06.2007 in 2011-12, which was erroneously included in the demand for service tax. The appellant's counsel argued that since the amount was received before the service tax levy date, it should not be subject to taxation. The Tribunal agreed with this contention and directed the adjudicating authority to verify and exclude these amounts from the demand.

Issue 3: Imposition of penalties under Section 78 of the Finance Act, 1994
The appellant's counsel requested to set aside the penalties imposed, citing the contentious nature of the issue regarding the levy of service tax on Renting of Immovable Property. The Tribunal acknowledged the ongoing litigation on this matter and referred to relevant cases pending before the Hon'ble Apex Court. Considering the interpretational nature of the issue, the Tribunal held that the penalty under Section 78 cannot be sustained and thus set it aside.

In conclusion, the Tribunal partly allowed the appeal and remanded the case to the adjudicating authority to reexamine the issues related to abatement of property tax and the inclusion of rent dues for the period prior to 01.06.2007 in the demand. The Tribunal also modified the order by setting aside the penalty imposed under Section 78 of the Finance Act, 1994.