Tribunal waives penalties for non-payment of service tax on renting property.

The Tribunal allowed the appeal of the appellant in a case involving non-payment of service tax for 'Renting of Immovable Property Service.' While confirming the service tax demand, the Tribunal set aside all penalties imposed on the appellant under section 80 of the Finance Act, 1994, considering their payment of service tax and registration with tax authorities. The appeal was allowed with a waiver of penalties, and the impugned order was partially modified in favor of the appellant.

---

---

Issues involved:
The issues involved in this case are non-payment of service tax, failure to file ST-3 returns, imposition of penalties, and waiver of penalties under section 80 of the Finance Act, 1994.

Non-payment of service tax and imposition of penalties:
The appellant provided 'Renting of Immovable Property Service' as defined in section 65(105)(zzzz) of the Finance Act, 1994. They failed to pay service tax of Rs.2,62,124/- on the gross amounts collected from clients and did not file ST-3 returns. The Show Cause Notice proposed a demand for service tax, interest, penalties, and late fee. The original authority confirmed the demand with interest and penalties, which was upheld by the Commissioner (Appeals). The appellant appealed to the Tribunal against this decision.

Failure to appear for hearings and waiver of penalties:
Despite multiple hearing dates, the appellant did not appear before the Tribunal. The Tribunal granted a waiver of pre-deposit and stay of recovery in a previous order, but the appellant did not actively pursue the appeal. The Tribunal gave one more opportunity for the appellant to appear, but they failed to do so. Consequently, the Tribunal proceeded to hear the appeal based on submissions by the Revenue.

Arguments and decision:
The Revenue argued that renting of immovable properties by the Panchayat falls under the taxable service category, and the appellant is liable to pay service tax. The appellant accepted the duty demand but contested the imposition of penalties. The appellant had paid the service tax due and got registered with the service tax authorities after being informed of their tax liability. The Tribunal considered the payment of service tax and the automatic liability for interest as per legal precedents. Regarding penalties, the Tribunal referred to relevant Supreme Court orders and decided to set aside all penalties imposed on the appellant. Consequently, the impugned order was partially modified, and the appeal was allowed with the waiver of penalties under section 80 of the Finance Act, 1994.

Conclusion:
The Tribunal, consisting of Shri P. Dinesha, Member (Judicial), and Shri M. Ajit Kumar, Member (Technical), pronounced the decision on 22.09.2023, modifying the penalties and allowing the appeal with consequential relief as per law.

---