Municipal Authority Ordered to Pre-Deposit Rs. 23,00,000 for Service Tax on Renting of Buildings

The Tribunal directed a Municipal Authority under the Government of Tamil Nadu to make a pre-deposit of Rs. 23,00,000/- within six weeks for service tax on "Renting of Buildings," with the waiver of the remaining tax amount, interest, and penalty until the appeal's disposal. Compliance was required by August 5, 2014.

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Issues: Application for waiver of pre-deposit of tax under "Renting of Immovable Property" for a Municipal Authority under the Government of Tamil Nadu.

The judgment pertains to an application for waiver of pre-deposit of tax amounting to Rs. 1,21,95,469/- along with interest and penalty for the period from June '07 to March '12. The applicant, a Municipal Authority under the Government of Tamil Nadu, was subjected to Service Tax under the category of "Renting of Immovable Property." The applicant's Counsel argued that fees collected under statutory provisions of the Tamil Nadu Municipal Act are not liable for service tax, citing Article 286 of the Constitution of India. On the other hand, the Revenue's Authorized Representative referred to a judgment by the Hon'ble Kerala High Court to justify the demand of service tax on "Renting of Immovable Property" by Municipalities. The Tribunal noted that while the demand of service tax on various fees would be examined during the appeal hearing, they agreed with the Revenue in regards to the tax demand on "Renting of Buildings." Citing a Supreme Court judgment, the Tribunal directed the applicant to make a pre-deposit of Rs. 23,00,000/- within six weeks, with the waiver of the remaining tax amount, interest, and penalty until the appeal's disposal. Compliance was to be reported by August 5, 2014.

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