2018 (1) TMI 1388 - AT - Service Tax

Tribunal rules in favor of charitable trust in service tax liability case

Shri Virendra Swaroop Charitable Trust Versus Commissioner of Central Excise & Service Tax, Kanpur

Shri Virendra Swaroop Charitable Trust Versus Commissioner of Central Excise & Service Tax, Kanpur - TMI Issues:1. Service tax liability for renting of immovable property.2. Applicability of extended period for demand.3. Validity of penalties imposed.Service tax liability for renting of immovable property:The appeal arose from a show cause notice regarding the appellant's service tax liability for providing 'Renting of Immovable Property' services. The appellant, a charitable trust, was required to pay service tax from October 2009 to March 2010 up to 2013-14. The appellant had deposited certain amounts as service tax for specific periods. The Revenue demanded a specific amount as service tax, which was confirmed in the adjudication. The appellant contended that the demand for the period October 2009 to March 2010 was time-barred due to the non-invocable extended period. The appellant argued that the demand was not sustainable due to the absence of suppression, fraud, or contumacious conduct. The appellant also highlighted the re-validation of the service tax levy under the 'Renting of Immovable Property Service' category. The Tribunal considered these arguments and held that the extended period was not applicable to the Revenue. Consequently, the appeal was allowed in part, granting the appellant consequential benefits.Applicability of extended period for demand:The Tribunal analyzed the history of the taxation under the 'Renting of Immovable Property Service' category. It noted that the levy of tax under this category had been initially struck down by the Delhi High Court in 2009 but was later revalidated by the Finance Act, 2010 with retrospective effect from June 1, 2007. The Tribunal found that there was no case of concealment by the appellant, as the transactions were duly recorded in the accounts and disclosed in income tax returns. Therefore, the Tribunal concluded that the extended period of limitation was not available to the Revenue in this case.Validity of penalties imposed:Regarding the penalties imposed under Sections 78, 77, and 76 of the Act, the appellant's counsel argued that there was no contumacious conduct justifying the penalties. The Tribunal agreed with this contention and held that the penalties were not sustainable. Consequently, the penalties under Section 78 and 77 were set aside. The Tribunal ruled in favor of the appellant on this issue, allowing the appeal in part and granting appropriate consequential benefits in accordance with the law.