2023 (11) TMI 260 - AT - Service Tax

Non-payment of service tax - Renting of Immovable Property Services - receipt of payouts on account of against transfer fee, forfeit charges, tamir izazat, annual lease, rent of shops and other rent - recovery alongwith interest and penalty - benefit of section 80 of FA. One of the grounds of appeal is that the Revenue has failed to consider the fact that the appellant is a municipality and its duties are well covered under the provisions of Section 66D of the Finance Act (the negative list). HELD THAT - Initially this Tribunal vide its Final Order No. 53436- 53500/2017 dated 25.05.2017 in the case of M/s. Krishi Upaj Mandi Samiti 2017 (5) TMI 1465 - CESTAT NEW DELHI has decided the issue of taxability and held that the appellants are not liable to service tax on shops/ sheds/platforms/land leased out in the notified market area for traders for temporary storage of agricultural produce traded in the market. In respect of shops, premises, buildings, etc. rented/leased out for any other commercial purpose other than with reference to agricultural produce (like bank general shop etc.), the same shall not be covered by the negative list and the appellants shall be liable to service tax. Otherwise also, it is observed that the appellant had admitted their tax liabilities. In view of the said settled provision and the admission of the appellant for his liability, there are no infirmity in the order confirming the impugned demand. Since the appellant had never declared the fact of the income received by renting of immovable property which was purely and admittedly for the purposes of commerce, there are no infirmity in the order imposing penalties under Section 75, 76, 77 and 78 of the Finance Act. Benefit u/s 80 of FA - HELD THAT - Though the appellant claimed the benefit under Section 80 but we do not find any reasonable cause with the appellant justifying the non-payment of service tax on the income which was being received for a long period of 5 to 6 years from renting of immovable properties, also the amount of service tax as confirmed against the appellant was not paid along with the interest in full within the stipulated time. Hence, there are no reason to extend the benefit of Section 80 of the Act to the appellant. Appeal dismissed.

Summary

Issues:
The issues involved in the judgment are non-payment of service tax by a local body engaged in providing Renting of Immovable Property Services, and the applicability of penalties under Section 75, 76, 77, and 78 of the Finance Act, 1994.

Issue 1: Non-payment of Service Tax

The appellant, a local body providing Renting of Immovable Property Services, was found to have not paid service tax on charges collected under various heads related to renting of immovable property. The department observed that the appellant had received payouts amounting to Rs. 5,83,46,864/- during the period from 01.04.2008 to 31.3.2013, making them liable to pay service tax of Rs. 64,16,499/-. A Show Cause Notice was issued proposing the recovery of the said amount, interest, and penalties under relevant sections of the Finance Act, 1994. The order confirming this proposal was passed on 18.03.2015, leading the appellant to appeal before the Tribunal.

Issue 2: Applicability of Penalties

During the proceedings, the appellant failed to appear despite multiple opportunities, leading to the declination of further adjournment. The arguments presented by the department highlighted the settled provision regarding tax liability, referring to a decision of the Hon'ble Apex Court in a similar case. The Tribunal examined the appellant's claim of being a municipality with duties covered under Section 66D of the Finance Act (the negative list), and the constitutional powers granted under Article 243W read with Schedule XII of the Constitution of India. However, based on the settled provision and the appellant's admission of tax liabilities, the Tribunal upheld the order confirming the demand for service tax and penalties under Section 75, 76, 77, and 78 of the Finance Act. The appellant's claim for the benefit under Section 80 was rejected due to the lack of reasonable cause justifying the non-payment of service tax over a period of 5 to 6 years. Consequently, the appeal was dismissed, affirming the order under challenge.

Separate Judgment:
No separate judgment was delivered by the judges in this case.