2018 (11) TMI 749 - AT - Service Tax

Renting of Immovable Property Service - non-payment of service tax - benefit of abatement of property tax paid for the period 2008-09 - demand alongwith interest and penalties - Held that - These pleas are required to be verified by the adjudicating authority - matter remanded for such verification. Penalties - Held that - During the impugned period, the issue whether Renting of Immovable Property is subject to levy of service tax, was under litigation - the matter is still pending consideration before the Hon ble Apex Court - being an interpretational issue, the levy of penalty under Section 78 of the Act ibid., cannot sustain and requires to be set aside. The matter is remanded to the adjudicating authority to look into the issue of abatement of property tax paid by the appellant as well as to verify whether the rent dues for the period prior to 01.06.2007 have been included in the demand - 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 they were not granted the abatement of property tax paid by them for the period 2008-09. The Ld. Counsel contended that this plea, along with evidence, was not considered by the adjudicating authority. 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. The Department erroneously raised a demand on these amounts, even though they should not be subject to service tax. The Tribunal agreed with the appellant's contention and directed the adjudicating authority to verify this issue and exclude the rent dues for the period prior to 01.06.2007 from the demand.

Issue 3: Imposition of penalties under Section 78 of the Finance Act, 1994
The Ld. Counsel argued for setting aside the penalties imposed, citing the contentious nature of the issue regarding the levy of service tax on Renting of Immovable Property. Referring to relevant case law, the Tribunal acknowledged the interpretational nature of the issue and decided to set aside the penalties under Section 78 of the Finance Act, 1994.

In conclusion, the Tribunal partly allowed the appeal and remanded the matter to the adjudicating authority to address the issues of abatement of property tax for 2008-09 and the inclusion of rent dues for the period prior to 01.06.2007 in the demand. Additionally, the Tribunal modified the order to set aside the penalties imposed under Section 78 of the Finance Act, 1994, considering the interpretational nature of the issue regarding the levy of service tax on Renting of Immovable Property.