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TMI Blog2023 (12) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... llant falls under any of the category as specified by the negative list. From the plain reading of Notification No.25/2012 it is evidence that this entry exempts the services of charitable nature of fake registered society/trust registered under Section 12AA of the Income Tax Act. It does not say that the trust/society registered under Section 12AA of the Income Tax Act is exempt from payment of service tax. The activities undertaken by the appellant are in nature of commercial activities or a consideration for providing certain income - there are no merits in the arguments advanced by the appellant to affect that for the reason that they are registered under Section 12AA of Income Tax Act, this exemption should be allowed to them. In our view this exemption Notification is not available to the appellant. Section 78 is pari material with Section 11AC of the Central Excise Act, 1944. Since it is held that extended period has been rightly invoked under Section 73 of the Finance Act, 1994, penalty under Section 78 cannot be faulted with - there are no irregularity in respect of penalties imposed. Further, penalty under Section 77 has been imposed for the reason that appellant wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Two Thousand Two Hundred Fifty Seven only), upon the Noticee under Section 76 of the Act for the period from April' 14 to March'15. (v) I also impose a penalty of Rs.10,000.00 (Rupees Ten Thousand only) upon the Noticee under Section 77 of the Act. (vi) I hereby also demand Late Fee of Rs.1,20,000.00 (Rupees One Lakh Twenty Thousand only) for non-submission of ST-3 returns under Section 70 of the Act read with Rule 7C of the Rules, as discussed above. 2.1 Appellant has been giving the premises situated at Krishi Pradarshini, Aligarh on rent to different vendors/persons for carrying out business from that premises. The premises comprises of certain constructed shops and vacant land which is used for providing the space for parking of sand/soil filled trucks and vehicles. Revenue was of the opinion that the activities undertaken by the appellant are taxable in the category of Renting of Immovable Property Services as defined under Section 66(E) of the Finance Act, 1994, as amended, read with Section 65B(41) of the said Act ibid. 2.2 Appellant did not took registration with the Department and also was not paying any service tax on the amount received as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.36% 28,34,148.00 12.36% TOTAL 52,54,758.00 Grand Total :- Period Amount of Rent collected Rate of Service Tax Service Tax payable (including Ed. Cess S.H. Ed. Cess) July, 2012 to March, 2014 5,13,00,835.00 12.36% 63,40,783.00 Total 63,40,783.00 2.4 This show cause notice also proposed to demand interest under Section 75 and proposed imposition of penalties under Section 77 and 78 of the Finance Act, 1994 and penalty and late fee are imposed for non-submission of ST-3 returns under Section 70 of the Act read with Rule 7C of Service Tax Rules, 1994. 2.5 Subsequently, a statement of demand dated 22.03.2016 was issued seeking to demand of service tax, which is as follows:- IN CASE OF CONSTRUCTED SHOPS/BUILDING: Period Amount of Rent collected (IN Rs.) Rate of Service Tax Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is clear that these activities as whole by the appellant trust with these objects are charitable nature which is defined under Section 2 (15) for the charity to ensure the benefit/advantage to general public utility. Commissioner Income Tax, Agra has granted registration under Section 12 AA of Income Tax Act, 1961. Accordingly, they should be granted exemption as a charitable trust under the provisions of Notification No.25/2012-ST dated 20.06.2012. The demand made is hit by limitation because they were having a bonafide benefit for non-payment of the service tax. Further, he relies upon the following decisions : - Indian Institute of Chemical Technology 2012 (26) S.T.R. 97 (A.P.)] Hotline CPT Ltd. [2015 (318) ELT 141 (Tri.-Del.) Classic Strips Pvt. Ltd. [2015 (318) ELT 20 (SC)] Jubilant Industries Ltd. [2013 (31) STR 181 (Tri.-Del.)] Acquire Services Pvt. Ltd. [2014 (36) STR 1148 (Tri.-Del.)] Subhash Khandelwal Sons [ 2011 (24) STR 461 (Tri.-Del.)] Century Denim [2014 (310) ELT 939 Tri.-Del.)] Reliance Industries Ltd. [2013 (293) ELT 679 (Tri.-Mumbai)] 3.3 Learned Authorized Representative reiterates the findings recorded in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f natural justice can be complained of. Unnatural expansion of natural justice without reference to the administrative realities and other factors of a given case, can be exasperating. 4.3 On the merits, for confirming the demand Commissioner has observed as follows:- 17.1 Leviability of Service Tax on the services rendered by the noticee is by virtue of clause (a) of Section 66E of the Act, which provides as under: Declared services.-The following shall constitute declared services, namely:- (a) renting of immovable property. Further, various terms and phrases have been defined under Section 65B of the Act, and which are relevant to the instant case are reproduced below with respective clauses of said Section 65B of the Act: (22) Declared service means any activity carried out by a person for another person for consideration and declared as such under section 66E. (34) negative list means the services which are listed in section 66D. (37) person includes.- (1) an individual, (ii) a Hindu Undivided Family. (ii) a company. (iv) a society. (v) a limited liability partnership, (vi) a firm. (vii) an asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d; Explanation 3.- For the purposes of this Chapter- (a) an unincorporated association or a body of persons, as the case may be and a member thereof shall be treated as distinct persons; (b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 4, - A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory. (49) support services means infrastructural, operational, administrative, logistic. marketing or any other support of any kind comprising functions that entities cany out in ordinory course of operation themselves but may obtain as services by outsourcing from others for ony reason whatsoever and shall include advertisement and promotion, construction or work contract, renting of immovable property, security, testing and analysis. 17.2 I also observe that in the instant case the information in respect of amount of rent received by the noticee in respect of shops/ building and vacant land given for commercial purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of immovable property is on the Government itself. I thus find that the gross amount received by Noticee in lieu of renting of immovable property to business entities for commercial purposes is leviable to Service Tax. As the noticee has not deposited the Service Tax, the same is demandable from Noticee along with interest under Section 73[1] and Section 75 of the Act respectively. 18. I further find that the noticee has neither got themselves registered with the department for payment of service tax within stipulated period under Section 69 of the Act read with Rule 4 of the Rules nor did they pay service tax on the value of taxable services received, under Section 68 of the Act read with Rule 6 of the Rules. They also did not file any ST-3 half yearly Return under Section 70 of the Act read with Rule 7 of the Rules. Further the noticee has supplied the details of receipt of rent after issuance of several reminders and pursuance to them, the submission of the desire information was apparently delayed willfully. This act of reluctance and delaying tactics adopted by the noticee reveals the act of suppression of facts by them with an intention to evade payment of service tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property includes (i) building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, (v) Vacant land, given on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce. but does not include- a. vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; b. vacant land, whether or not having facilities clearly incidental to the use of such vacant land; c. land used for educational, sports, circus, entertainment and parking purposes; and d. building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Explanation 2. For the purposes of this sub-clause, an immovable pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of clause (v) of Explanation 1 of the definition of renting of immovable property; hence is liable for payment of Service Tax on such services with effect from 01.07.2010. 4.7 The taxable service under the category of renting of immovable movable property with effect from 01.07.2012 has been made declared service as per Section 66E of the amended Finance Act, 1994. Also all the expansions in the definition as it existed prior to this date have been deleted. Thus all cases of renting of immovable property has been declared as taxable service and made liable to service tax, without any exception for those specified under the negative list. We do not find that appellant falls under any of the category as specified by the negative list. 4.8 Appellant has claimed the benefit of exemption under Notification No.25/2012 stating that they are registered under Section 12 AA of the Income Tax Act, as charitable society/trust for sake of convenience the relevant entries of the is reproduced bellow:- 4. Services by an entity registered under section 12AA of the Income Tax Act, 1961 (43 of 1961) by way of charitable activities; 4.9 From the plain reading of above it is ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise, Pune reported in 2010 (262) ELT 720 (Tri. Mum.) has observed at paragraphs 5 and 6, as under:- 5. We have considered these submissions also. Though we are not impressed with the submissions relating to the test audit‟, we are not in a position to ignore the submission of the ld. SDR that the appellant continued to exclude the amortized cost of moulds from the assessable value of the goods supplied to Telco even after the Tribunal‟s decision in Flex Industries case (1997), which was to the effect that such cost was liable to be included in the assessable value of the goods. A contra decision of the Tribunal came, admittedly, after January 1999. Having made an endeavour to derive benefit out of the so-called confusion arising out of conflicting decisions of the Tribunal , the appellant cannot turn around and say that they were not aware of the Tribunal‟s decision in Flex Industries case. The facts and circumstances of this case are explicit enough for us to hold that the appellant deliberately excluded the amortized cost of moulds (supplied free of cost by Telco) from the assessable value of the excisable goods supplied to Telco (buyer) even after the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be imposed as penalty for the transactions made between the period from July 12 to March 14 which is calculated as Rs 31,70,392.00. The provision of imposition of penalty under section 76 78 of the Act are applicable in the instant case by virtue of Section 78 B(1) of the Act. 4.13 section 78B (1) of the Finance Act, 1994 reads as follows: SECTION 78B. Transitory provisions. (1) Where, in any case, (a) service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded and no notice has been served under sub-section (1) of section 73 or under the proviso thereto, before the date on which the Finance Bill, 2015 receives the assent of the President; or (b) service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded and a notice has been served under sub-section (1) of section 73 or under the proviso thereto, but no order has been passed under sub-section (2) of section 73, before the date on which the Finance Bill, 2015 receives the assent of the President, then, in respect of such cases, the provisions of section 76 or section 78, as the case may be, as amended b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in paragraph 2 of the decision, as follows : 2. A Division Bench of this Court has referred the controversy involved in these appeals to a larger Bench doubting the correctness of the view expressed in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals is whether Section 11AC of the Central Excise Act, 1944 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows : 5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under Section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue to establish that the extended period of limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian Institute of Chemical Technology 2012 (26) S.T.R. 97 (A.P.)] Hotline CPT Ltd. [2015 (318) ELT 141 (Tri.-Del.) Classic Strips Pvt. Ltd. [2015 (318) ELT 20 (SC)] Jubilant Industries Ltd. [2013 (31) STR 181 (Tri.-Del.)] Acquire Services Pvt. Ltd. [2014 (36) STR 1148 (Tri.-Del.)] Subhash Khandelwal Sons [ 2011 (24) STR 461 (Tri.-Del.)] Century Denim [2014 (310) ELT 939 Tri.-Del.)] Reliance Industries Ltd. [2013 (293) ELT 679 (Tri.-Mumbai)] All the above cases have held that extended period of limitation cannot be invoked in the facts and circumstances of those case as tribunal had concluded that the party in appeal in these case were either under bonafide belief or the facts were in the knowledge of the department. The facts in case in dispute are not identical appellant were aware of their liability to service tax under the category of Renting of Immovable Property at least from 30.11.2012, when the show cause notice for the period June 2007 top March 2012 was issued to them. It was there submission as we have noticed from the order dated 20.02.2020 of the tribunal in the appellants own case that they were not disputing the leviability o ..... 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