Tribunal Waives Interest and Penalties in Retrospective Duty Case

The Tribunal held that interest and penalties were not payable in cases involving retrospectively assessed duty for "Renting of Immovable Property Service." The appellant's plea to waive interest and penalties was granted, modifying the original order accordingly. The Tribunal emphasized the legislative intent behind the retrospective amendment clarifying tax liability, aiming to tax commercial use of rented immovable property. The judgment, delivered by SHRI P. DINESHA and SHRI M. AJIT KUMAR, on 5.7.2023, supported the appellant's argument with references to relevant case law.

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Issues:
The appeal involves the question of service tax liability on "Renting of Immovable Property Service" for the period from 1.4.2010 to 31.3.2011, specifically focusing on the sustainability of the demand, interest, and penalty imposed.

Issue 1: Service Tax Liability on Renting of Immovable Property Service

The original authority confirmed the demand for duty based on the constitutionally valid leviability of Service Tax on Renting of Immovable Property Services, citing a relevant High Court decision. The appellant argued that the liability to pay interest and penalty should not arise in the case of a retrospective legislation, relying on a Supreme Court judgment. The Tribunal noted a retrospective amendment clarifying the tax liability on renting of immovable property and held that interest and penalty were not payable in such cases. The appellant's prayer to waive the interest and penalties was allowed, and the impugned order was partly modified accordingly.

Issue 2: Interpretation of Legislative Intent

The Tribunal highlighted the retrospective amendment made to the definition of 'Renting of Immovable Property Service' to clarify the legislative intent and ensure certainty in tax liability. The amendment aimed to tax the commercial use of immovable property hired on rent and was given retrospective effect from 01.06.2007. The Tribunal emphasized that interest and penalties were not payable in cases where retrospectively assessed duty was involved, as per established legal principles. The appellant's argument was supported by references to relevant case law and the Tribunal's analysis led to the waiver of interest and penalties in this case.

Separate Judgment by the Judges:
The judgment was pronounced by SHRI P. DINESHA, MEMBER (JUDICIAL) AND SHRI M. AJIT KUMAR, MEMBER (TECHNICAL) on 5.7.2023.

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