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2022 (7) TMI 923 - AT - Service TaxLevy of Service Tax - renting of immovable property service - rent paid to Director for hiring of residential property which is used as residence of director - GTA service - Reverse Charge Mechanism - revenue neutrality - extended period of limitation - HELD THAT - The demand of tax of Rs. 70,140/- have been wrongly raised as the premises are residential premises and being used for residence of the director. So far the other two demands are concerned, it is held that the situation is wholly revenue neutral and accordingly, invocation of extended period of limitation is not available to the Revenue in the facts and circumstances. The demand alongwith penalty set aside - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Liability to pay service tax on renting of immovable property service 2. Liability to pay service tax under Reverse Charge Mechanism (RCM) on rent paid to Director for hiring residential property 3. Requirement to pay service tax under RCM on Goods Transport Agency (GTA) service Analysis: 1. The first issue pertains to the liability of the appellant to pay service tax amounting to Rs. 29,209/- on renting of immovable property service. The appellant, during the period of dispute from April 2015 to June 2017, was registered with the service tax department, maintained proper books of accounts, and filed periodical returns. The service tax in question was inadvertently not paid due to oversight, as the appellant had a history of regular compliance and audit scrutiny. The appellant, being a manufacturer, was entitled to Cenvat credit for the service tax paid, and the implementation of GST rendered the amount refundable. The tribunal found no element of suppression or contumacious conduct, leading to a conclusion of revenue neutrality. Consequently, the demand for service tax on this issue was set aside. 2. The second issue revolves around the liability of the appellant to pay service tax under RCM amounting to Rs. 70,140/- on rent paid to the Director for hiring a residential property utilized as the director's residence. The appellant argued that since the premises were used for residential purposes and not for commercial activities, no service tax was chargeable. The tribunal agreed with this contention, highlighting that service tax is not applicable unless the premises are utilized for commercial purposes. Therefore, the demand for service tax under RCM in this scenario was deemed unjustified and was consequently set aside. 3. The final issue concerns the requirement to pay service tax under RCM on GTA service. The tribunal did not delve into this issue explicitly in the judgment, indicating a lack of discussion or contention on this particular matter. However, it can be inferred that since there was no specific mention of any liability or demand related to GTA service in the final decision, the tribunal did not find any grounds to uphold such a demand. Therefore, the absence of discussion on this issue suggests that the tribunal did not find any merit in imposing service tax under RCM on GTA service. In conclusion, the tribunal ruled in favor of the appellant on all three issues, setting aside the demands for service tax and penalties. The judgment emphasized the concept of revenue neutrality in assessing the liability for service tax and highlighted the importance of considering the purpose of property usage in determining tax obligations.
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