Tribunal upholds Service Tax demand on property renting services, dismisses appeal.

The appeal was dismissed by the tribunal, upholding the demand for Service Tax on renting of immovable property services and penalty under Section 78 of the Finance Act, 1994. The tribunal found that the amount received by the appellant was for renting of immovable property, even though there was no direct agreement with the tenant, and there was no evidence that the seller had already paid service tax on the amount. The tribunal held that the appellant could have availed credit for the service tax already paid by the seller.

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Issues:
Demand of Service Tax on renting of immovable property services and imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:
The appeal was filed against the demand of Service Tax on renting of immovable property services and imposition of penalty under Section 78 of the Finance Act, 1994. The appellant argued that they had purchased a property which was rented out by the seller to a third party at the time of purchase. The appellant received compensation from the seller for the period during which the property was rented out. The appellant contended that the amount received was compensation and not rent, as there was no direct agreement with the tenant. The appellant claimed that the service tax should not be applicable as the seller would have already paid tax on the amount received. However, the tribunal found that the amount received by the appellant was in respect of renting of immovable property, even though there was no direct agreement with the tenant. The tribunal noted that there was no evidence to support the claim that the seller had already paid service tax on the amount. The tribunal held that in such circumstances, the appellant could have availed credit for the service tax already paid by the seller. Therefore, the appeal was dismissed, and the demand for service tax and penalty upheld.

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