2019 (11) TMI 440 - AT - Service Tax

Renting of Immovable Property Services to commercial concerns - non-payment of service tax - period from June 2007 to August 2012 - demand of interest - interest for part period paid - imposition of penalty - HELD THAT - The service tax was levied on the activity of renting of immovable property service by giving retrospective effect to Section 65(105)(zzzz) of the Finance Act from 01/06/2007 itself. The said Finance Act received ascent of the Hon ble President of India on 28/05/2012 and as per Section 80(2) of the Finance Act, payment of tax and interest was to be made within 6 months i.e. on or before 27/11/2012. Further, the service tax amount of ₹ 47,37,557/- for the period June 2007 to August, 2007 has been discharged by the appellant on 25/10/2012 prior to the stipulated date. Further, as per the show-cause notice, the demand for service tax was for an amount of ₹ 43,68,851/- and the appellant has paid ₹ 47,37,557/- i.e. ₹ 3,68,706/- is paid in excess and subsequently for the period July 2010 to August 2012, appellant has also paid interest of ₹ 2,86,844/-. Demand of Interest - HELD THAT - The appellants are liable to pay interest from June 2007 to June 20102. The appellant has already paid the interest from July 2010 to August, 2012 amounting to ₹ 2,84,844/- and now they are only liable to pay interest from June 2007 to June 2010. Since the appellant has already paid excess amount of service tax in the month of October 2012 itself amounting to ₹ 3,68,706/-, which can be appropriated towards the liability of interest - Since the amount of interest has not been calculated, the matter is remanded to the original authority for quantification of interest for the period June 2007 to June 2010 and the same may be appropriated from the excess amount paid by the appellant. Imposition of penalty - HELD THAT - The assessee has paid the duty within the stipulated period as prescribed in the amendment, which was given retrospective effect. Prior to the amendment there was dispute regarding the taxability of renting of immovable property service and the issue has not yet been settled - the imposition of penalty is totally unwarranted and the same is set aside. The matter is remanded to the original authority for quantification of interest - Appeal allowed by way of remand.

Summary

Issues:
- Demand of interest under Section 75 of the Finance Act, 1994
- Imposition of penalty under Section 78 of the Finance Act, 1994

Analysis:

Demand of Interest under Section 75:
The appellant, engaged in Renting of Immovable Property Services, accepted a liability for non-payment of service tax for the period from June 2007 to August 2012. The appellant paid the tax amount of &8377; 47,37,557/- on 25/10/2012. The issue arose when the appellant did not pay the entire interest liability under Section 75 of the Finance Act, 1994. The adjudicating authority confirmed the demand, appropriated the amounts paid, and imposed a penalty under Section 78 of the Act. The appellant contended that the taxability of renting services was given retrospective effect from 01/06/2007 and relied on various legal precedents to support their case. The Tribunal found that the service tax was levied on renting of immovable property services retrospectively from 01/06/2007 and that the appellant had paid the tax amount within the prescribed time frame. The Tribunal also noted that the appellant had paid excess tax, which could be adjusted against the interest liability. The matter was remanded to the original authority for quantification of interest for the period June 2007 to June 2010.

Imposition of Penalty under Section 78:
Regarding the imposition of penalty under Section 78, the Tribunal considered the circumstances where the appellant had paid the duty within the stipulated period as prescribed in the retrospective amendment. Given the ongoing dispute regarding the taxability of renting of immovable property services and pending cases before higher courts, the Tribunal deemed the imposition of penalty unwarranted. Citing precedents, the Tribunal set aside the penalty imposed under Section 78. Consequently, the matter was remanded to the original authority for quantification of interest and the appeal was allowed by way of remand, with the penalty being set aside.

In conclusion, the Tribunal upheld the demand of interest for the relevant period, allowed the appeal by way of remand for quantification of interest, and set aside the penalty imposed under Section 78. The decision was based on the retrospective effect of the relevant amendments, legal precedents, and the ongoing disputes regarding the taxability of the services in question.