Tribunal Upholds Service Tax Liability on Renting Premises

The Tribunal upheld the Service Tax liability and interest on renting out premises, emphasizing that non-payment of tax on immovable property attracts interest. However, the penalties imposed on the appellant under Section 80(2) of the Finance Act, 1994, were set aside since the appellant had discharged the Service Tax liability and interest.

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Issues involved: Service Tax liability on renting of immovable property, interest on Service Tax, penalty under Section 80(2) of the Finance Act, 1994.

Service Tax Liability on Renting of Immovable Property:
The case involved the appellant's Service Tax liability for renting out premises under Section 65(105)(zzzz) of the Finance Act, 1994. The appellant had rented their premises to clients under lease agreements and collected Service Tax. The Tribunal noted that due to a retrospective amendment, the appellant was required to discharge the Service Tax liability for the relevant period. The Tribunal rejected the appellant's argument that Service Tax should not be levied on the rent received for the premises, emphasizing that non-payment of tax on immovable property attracts interest. Consequently, the Tribunal upheld the Service Tax liability and the interest on it.

Interest on Service Tax:
The Tribunal disagreed with the appellant's contention that interest is not payable on Service Tax, stating that the liability was always applicable to immovable property. Therefore, the Tribunal upheld the interest on the Service Tax amount, emphasizing that non-payment of tax on immovable property attracts interest.

Penalty under Section 80(2) of the Finance Act, 1994:
Regarding the penalty imposed by the adjudicating authority, the Tribunal considered that since the appellant had discharged the Service Tax liability and interest, they should benefit from Section 80(2) of the Finance Act, 1994. This section aims to prevent penalties on service providers under the renting of immovable property during the relevant period. Consequently, the Tribunal set aside the penalties imposed on the appellant.

In conclusion, the Tribunal upheld the Service Tax liability and interest while setting aside the penalties imposed on the appellant under Section 80(2) of the Finance Act, 1994. The appeal was disposed of accordingly.

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