Court quashes Service Tax order, ruling in favor of petitioner due to payment discrepancies.

The court quashed the Order-in-Original demanding Service Tax on renting of immovable property service, ruling in favor of the petitioner due to discrepancies in payment reconciliation and lack of proper diligence by the tax authorities. The court found that the petitioner had already made payments exceeding the demanded amount, concluding that the tax demand was unjustified. As a result, the impugned order was set aside, and the case was closed in favor of the petitioner without costs.

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Issues:
Challenge to Order-in-Original demanding Service Tax, interest, and penalties for renting of immovable property service.

Analysis:
The petitioner contested an Order-in-Original demanding payment of Service Tax on renting of immovable property service for a specific period. The court acknowledged the availability of an alternative appeal remedy but proceeded due to certain reasons. The central issue was whether the respondents were justified in demanding the Service Tax. The petitioner owned two properties, having remitted the tax for one property but disputed the liability for the other. The petitioner's statement indicated partial payment due to the lessee's non-compliance, with subsequent assurance of settling dues. Despite the petitioner's submission of payment evidence, a Show Cause Notice was issued, leading to the impugned order. The court noted the lack of discussion on the payment aspect in the order, highlighting a failure in due diligence. The petitioner's subsequent representations were disregarded, with the first respondent maintaining the tax demand without acknowledging payments.

The counter affidavit revealed discrepancies between the petitioner's payments and the department's demands, indicating a lack of reconciliation within the Service Tax Commissionerate. The court criticized the arbitrary nature of the impugned order, emphasizing the department's failure to address payment discrepancies adequately. Noting that the petitioner's payments exceeded the demanded amount, the court concluded that the petitioner had been unfairly targeted by the department. Consequently, the court quashed the impugned order, ruling in favor of the petitioner and closing the case without costs.

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