The Panchayat’s Rental Service Tax liability waived after timely payment and registration by the Customs, Excise & Service Tax Appellate Tribunal, Chennai.


The appellant is providing ‘Renting of Immovable Property Service’ as defined in section 65(105)(zzzz) of the Finance Act, 1994 during the period 1.4.2011 to 31.3.2012.. The appellant has failed to pay service tax of Rs.2,62,124/- on the gross amounts collected from the clients for rendering the above service on the due date specified in Rule 6 of the Service Tax Rules, 1994 r/w sec. 68 of the Finance Act, 1994 and have failed to file ST-3 returns. Show Cause Notice dated 16.10.2012 was issued proposing demand of service tax of Rs.2,62,124/- with interest and imposition of penalties under the Finance Act, 1994 and recovery of late fee under Rule 7C of the Service Tax Rules, 1994 r/w sec. 70 of the Finance Act, 1994. After due process of law, the original authority confirmed the demand along with interest and imposed penalties. On appeal, Commissioner (Appeals) upheld the same.


Anandalakshmi Ganeshram, Superintendent (AR) has stated that renting of immovable properties by the Panchayat falls under the definition of Renting of Immovable Property for use in the course of furtherance of business of commerce as defined under sec. 65(90a) of the Finance Act, 1994.


The division bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) found from the appeal filed by the appellant that the service tax amount which is due is already remitted and appropriated to the Government. 

The bench noted that they have stated that since the appellant is a statutory body they were of the opinion that the amount collected by the Panchayats from such immovable properties, will not attract service tax. Once their liability to pay taxes was explained by the service tax authorities, they immediately applied for the registration and got their panchayat registered with the service tax authorities. Non-filing of returns is a technical lapse, hence they prayed that further proceedings be dropped and the lapse be condoned. 

It was found by the court that the appellant has paid the service tax involved and the same has been appropriated to the Government by the impugned order. Further interest is necessarily linked to the duty payable, and such liability arises automatically by operation of law. 

The Tribunal held that there exists sufficient cause for the appellant not to have paid the tax due on time and there does not appear to have been any intention on their part to evade payment of duty. Hence, they are eligible for a waiver of penalties as per section 80 of the Finance Act 1994.

Case title: Executive Officer v/s Commissioner of GST & Central Excise

Citation: Service Tax Appeal No.40948 of 2014

Amit Sharma

Author of Tax Concept

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