2019 (7) TMI 570 - AT - Service Tax

Renting of immovable property Service - appellant rented out shops and showrooms in Jaipur and received rent - period January, 2008 to November, 2010 - HELD THAT - The appellant does not seriously dispute the liability for payment of service tax. The consideration received by them for renting of shops/ showrooms in Jaipur is liable for payment of service tax under Section 65(105)(zzzz) of the Act - demand alongwith interest upheld. Penalties u/s 78 - HELD THAT - The lower appellant authority has recorded the fact that confusion prevailed at the relevant time about the liability for payment of service tax on renting of immovable property. Several disputes had arisen regarding this service which came to be settled only with the decision of the Hon ble Delhi High Court in the case of Home Solution Retail India Limited Vs. Union of India 2009 (4) TMI 14 - DELHI HIGH COURT - All penalties set aside. Appeal allowed in part.

Summary

Issues:
- Liability for payment of service tax on renting of immovable property
- Applicability of penalties under various Sections of the Finance Act, 1994

Analysis:

Issue 1: Liability for payment of service tax on renting of immovable property
The appeal was filed against the Order-in-Appeal directing payment of service tax for renting out shops and showrooms in Jaipur between January 2008 to November 2010. The Department contended that the appellant was liable under Section 65(105)(zzzz) of the Finance Act, 1994. The original authority upheld the demand for service tax, interest, and penalties. The First Appellant Authority upheld the demand but waived penalties under Section 76 and 77, while upholding the penalty under Section 78. The appellant, represented by Ms. Priyanka Goel, did not dispute the service tax liability but sought a waiver of penalties under Section 78, citing retrospective amendments in the Finance Act, 2010. The Departmental Representative supported the penalties imposed by the Commissioner(Appeals).

Issue 2: Applicability of penalties under various Sections of the Finance Act, 1994
The Tribunal upheld the liability for service tax and interest, as admitted by the appellant. The Tribunal noted that confusion existed regarding the service tax liability on renting of immovable property until a retrospective amendment in the Finance Act, 2010 clarified the issue. Referring to the decision of the Hon'ble Delhi High Court in a specific case, the Tribunal held that the appellant was entitled to a waiver of penalties under Section 80 of the Finance Act, 1994. Consequently, all penalties, including those under Section 78, were set aside. The demand for service tax and interest was upheld, while penalties were waived in light of the legal developments and the retrospective amendment.

In conclusion, the Tribunal allowed the appeal, upholding the service tax and interest payment but setting aside all penalties under Section 80 of the Finance Act, 1994. The judgment provided a detailed analysis of the liability for service tax on renting of immovable property and the applicability of penalties under various sections of the Finance Act, 1994, considering the legal developments and retrospective amendments that clarified the issue.