2019 (1) TMI 1310 - AT - Service Tax

Renting of Immovable Property Services - non-payment of service tax - appellant paid up the entire service tax liability which was, however, not considered by the authorities below holding that the appellant has not produced the challan copy - principles of natural justice - penalty - Held that - The Finance Act, 2012 introduced Sub-Section 2 of Section 80 in order to waive penalties in cases where service tax on Renting of Immovable Property was paid within the prescribed time. The issue whether Renting of Immovable Property is subject to levy of service tax was contentious for a long time. There were several litigations pending before various High Courts. Being an interpretational issue and also taking into consideration the fact that the appellants have discharged a substantial portion of the service tax liability, this is a fit case to invoke Section 80 of the Finance Act, 1994 - penalty in its entirety is set aside. The impugned Order is modified to the extent of setting aside the penalties imposed and also remanding the matter to the adjudicating authority for the limited purpose of re-quantification of the service tax demand after looking into the aspect whether the appellant has discharged the amount of ₹ 52,932/- towards the said liability - appeal partly allowed and partly remanded.

Summary

Issues:
1. Whether the appellant properly discharged service tax on the entire income of rent.
2. Whether penalties imposed on the appellant are justified.
3. Whether penalties can be waived under Section 80(2) of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in Renting of Immovable Property Services, was issued a Show Cause Notice for not discharging service tax on the entire income of rent. The Original Authority confirmed the demand, interest, and penalties. The Commissioner (Appeals) modified the order, upholding a demand of &8377; 2,91,167 and setting aside penalties for service tax paid before 28.05.2012. The appellant appealed to the Tribunal, arguing that they had paid the entire service tax liability, including &8377; 52,932, which was not considered by the authorities. The Tribunal remanded the matter to verify the payment of &8377; 52,932.

2. The appellant contended that penalties should be waived under Section 80(2) of the Finance Act, 1994, as they paid the service tax within six months and submitted challan copies. The respondent argued that penalties were justified as the appellant did not provide proof of payment of &8377; 52,932. The Tribunal found that the appellant had discharged a substantial portion of the service tax liability and invoked Section 80 to set aside all penalties imposed.

3. Considering the interpretational issue regarding the levy of service tax on Renting of Immovable Property and the appellant's payment of a significant portion of the liability, the Tribunal deemed it appropriate to waive the penalties entirely. The impugned order was modified to set aside the penalties and remand the matter for re-quantification of the service tax demand related to the &8377; 52,932 payment. The appeal was partly allowed and partly remanded with consequential reliefs as per law.