2018 (11) TMI 747 - AT - Service Tax

Penalty - renting of immovable property service - waiver of penalty sought on the ground that during the period the issue was under confusion - 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 as per the decisions cited by ld. counsel for the appellant - the penalties imposed cannot sustain and requires to be set aside. The matter is remanded to the adjudicating authority to reconsider the issues - appeal allowed in part and part matter on remand.

Summary

Issues:
1. Appellant's disagreement with the demand of service tax, interest, and penalties.
2. Appellant's eligibility for exemption under Notification No. 6/2005-ST.
3. Consideration of cum-tax benefit for the appellant.
4. Appellant's plea for abatement for property tax under Notification No.24/2007-ST.
5. Waiver of penalties under Section 80 of the Finance Act, 1994.

Analysis:
1. The appellant contested the liability to pay service tax under renting of immovable property service, acknowledging the period from 1.6.2007 to 31.3.2008. The appellant claimed eligibility for exemption of ?8 lakhs under Notification No. 6/2005-ST. Additionally, the appellant requested cum-tax benefit as they had not collected the service tax. The plea for cum-tax benefit and abatement under Notification No.24/2007-ST was not considered by the authorities below, leading to a remand for fresh consideration.

2. The appellant's counsel highlighted the eligibility for exemption under Notification No. 6/2005-ST, which was not adequately considered by the adjudicating authority. The Tribunal directed the adjudicating authority to reconsider this aspect along with the appellant's claim for abatement for property tax under Notification No.24/2007-ST, subject to sufficient proof being provided by the appellant.

3. The appellant sought a waiver of penalties under Section 80 of the Finance Act, 1994, citing the confusion and litigation surrounding the levy of service tax on renting of immovable property during the disputed period. Referring to pending cases before the Hon'ble Supreme Court, the Tribunal set aside the penalties imposed under sections 77 and 78 of the Finance Act, 1994. The matter was remanded to the adjudicating authority for further review.

4. The Tribunal acknowledged the unsettled nature of the issue regarding the levy of service tax on renting of immovable property during the relevant period, considering the pending litigations and decisions cited by the appellant's counsel. Citing a case pending before the Hon'ble Supreme Court, the Tribunal concluded that the penalties imposed could not be upheld and were thus set aside. The impugned order was modified to reflect the setting aside of the penalties imposed.

5. In conclusion, the appeal was partly allowed, and the matter was remanded to the adjudicating authority for reconsideration of the issues related to cum-tax benefit, exemption under Notification No. 6/2005-ST, abatement for property tax, and waiver of penalties under Section 80 of the Finance Act, 1994.