The Customs, Excise & Service Tax Appellate Tribunal, Chennai held appellants not liable for penalties in renting of Immovable Property in Service Tax case.
Facts
The appellants are engaged in “Renting of Immovable Property Service”. Show Cause Notice was issued to them treating them as ‘association of persons’ and service tax was demanded from them collectively.
The original authority confirmed the service tax demand of Rs.13,67,139/- along with other adjudicatory liabilities.
On appeal, Commissioner (Appeals) upheld the order of adjudication.
Submissions
R. Balagopal, consultant for the appellants, submitted that the appellants are not disputing the service tax demand and the interest as they have already paid the entire service tax liability along with interest.
O.M. Reena, Additional Commissioner (AR) submitted that but for the detection by the officers, the same would not have come to light and the authorities have rightly invoked the extended period and the penalties may be confirmed.
Decision
The single bench of M. Ajit Kumar Member (Technical) noted that the impugned order is restricted to imposition of penalties on the appellants and the demand for duty and interest is not an issue. Appellants prayer is also with regard to penalty only.
The bench observed that according to the Judgment of Delhi High Court, no service tax could be levied on the activity of renting per se. Subsequently changes made by the Finance Act, 2010 in respect of enlargement of scope of Renting of Immovable Property Services’ was challenged by the assessees’ PAN India and during the impugned period, the courts had taken a view that the amendment was unconstitutional and had even granted a stay in this regard.
The Tribunal stated that in a case where the constitutional validity of the levy is yet to be decided the dispute is interpretational in nature. Hence reasonable cause has been made out for delayed payment of duty.
The bench agreed with the appellant that invocation of penalty in such a situation is not justified as per section80 of the Finance Act, 1994 due to the reasonable cause shown.
Case title: Smt. M. Rajeswari v/s Commissioner of GST & Central Excise
Citation: Service Tax Appeal Nos.40032 of 2023
