Appellant wins refund appeal for service tax paid on renting property services

The Tribunal allowed the appeal in the case concerning a claim for refund of service tax paid for "renting of immovable property services" from 2007-08 to 2012-13. The Appellant, who paid the tax under audit pressure, demonstrated that the total value of services provided each year remained below the taxable limit specified in Notification No. 6/2005 - ST. The Tribunal found the Appellant entitled to the refund, provided evidence showing non-charging of service tax to the service recipient is verified and approved by the refund sanctioning authority. The case was remanded for the adjudicating authority to process the refund accordingly.

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Issues:
Claim for refund of service tax paid under "renting of immovable property services" for the period 2007-08 to 2012-13 based on the assertion that the aggregate value of services is below the taxable limit as per Notification No. 6/2005 - ST.

Analysis:
The Appellants were initially required to pay service tax on "renting of immovable property services" following an audit objection for the period 2007-08 to 2012-13. Subsequently, they filed a refund claim contending that the total value of services provided fell below the taxable threshold specified in Notification No. 6/2005 - ST and therefore, they were not liable to pay service tax. The authorities raised concerns regarding the absence of submission of the rent agreement, invoices, evidence of not passing on the tax burden to clients, and lack of proof that the combined value of services from all units remained below the exemption limit. The lower authority rejected the refund claim on the grounds that the tax was paid without contesting the audit objection and no evidence was presented to establish eligibility for the exemption. The Commissioner (Appeals) upheld this decision citing non-submission of a reply to the show cause notice and the payment of service tax despite being eligible for an exemption.

During the appeal, the Appellant argued that the tax payment was made under audit pressure and not voluntarily, emphasizing that no other services were provided apart from those in question, and the total value of services each year stayed below the taxable limit, supported by evidence submitted. The Joint Commissioner (AR) supported the lower authorities' findings. Upon review, the Tribunal noted that the service tax was paid due to the audit objection, indicating it was not a voluntary payment. The Appellant had already provided relevant documents such as the Balance Sheet, rent agreement copy, and a certificate from the service recipient confirming no service tax was charged. Consequently, the Tribunal held that the Appellant was entitled to the refund, provided they present evidence demonstrating non-charging of service tax to the service recipient to the refund sanctioning authority for verification and approval.

In conclusion, the Tribunal allowed the appeal, remanding the case to the adjudicating authority with directions to sanction the refund upon verification of the evidence showing non-charging of service tax to the service recipient.

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