Penalty relief for renting of immovable property service tax where tax and interest were paid before the statutory cutoff.

Penalty for service tax on renting of immovable property could not be sustained where the tax and interest were discharged within the statutory period prescribed after presidential assent to the Finance Act, 2012. The Tribunal applied Sections 80(2) and 80A of the Finance Act, 1994 and found that, because the appellant had paid the service tax liability together with interest before the cutoff, the statutory conditions for imposing penalty were not met. The penalties were therefore set aside.

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Issues: Whether penalties under the Finance Act, 1994 could be sustained where service tax and interest on renting of immovable property services had been paid before the statutory cutoff.

Analysis: The liability related to service tax on consideration received for renting of immovable property. The Tribunal noted that Section 80(2) and Section 80A of the Finance Act, 1994 provided that where the service tax liability together with interest is discharged within the prescribed period after presidential assent to the Finance Act, 2012, penalty would not arise. Since the appellant had discharged the tax and interest before such assent, the conditions for invoking penalty were not satisfied.

Conclusion: The penalties were not sustainable and were set aside in favour of the appellant.

Ratio Decidendi: Where service tax liability with interest on renting of immovable property services is paid within the period prescribed by Section 80A of the Finance Act, 1994, penalty cannot be imposed.

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