Tribunal Confirms Local Body's Obligation to Pay Service Tax and Penalties for Renting Property from 2008-2013.

The Tribunal upheld the order demanding the appellant, a local body, to pay service tax of Rs. 64,16,499/- for renting immovable property from 01.04.2008 to 31.03.2013, along with applicable penalties under Sections 75, 76, 77, and 78 of the Finance Act, 1994. Despite the appellant's claim of exemption as a municipality under Section 66D and constitutional provisions, the Tribunal found no reasonable cause for the non-payment over several years. The appeal was dismissed, affirming the original order, and the appellant's request for relief under Section 80 was denied.

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Issues:
The issues involved in the judgment are non-payment of service tax by a local body engaged in providing Renting of Immovable Property Services, and the applicability of penalties under Section 75, 76, 77, and 78 of the Finance Act, 1994.

Issue 1: Non-payment of Service Tax

The appellant, a local body providing Renting of Immovable Property Services, was found to have not paid service tax on charges collected under various heads related to renting of immovable property. The department observed that the appellant had received payouts amounting to Rs. 5,83,46,864/- during the period from 01.04.2008 to 31.3.2013, making them liable to pay service tax of Rs. 64,16,499/-. A Show Cause Notice was issued proposing the recovery of the said amount, interest, and penalties under relevant sections of the Finance Act, 1994. The order confirming this proposal was passed on 18.03.2015, leading the appellant to appeal before the Tribunal.

Issue 2: Applicability of Penalties

During the proceedings, the appellant failed to appear despite multiple opportunities, leading to the declination of further adjournment. The arguments presented by the department highlighted the settled provision regarding tax liability, referring to a decision of the Hon'ble Apex Court in a similar case. The Tribunal examined the appellant's claim of being a municipality with duties covered under Section 66D of the Finance Act (the negative list), and the constitutional powers granted under Article 243W read with Schedule XII of the Constitution of India. However, based on the settled provision and the appellant's admission of tax liabilities, the Tribunal upheld the order confirming the demand for service tax and penalties under Section 75, 76, 77, and 78 of the Finance Act. The appellant's claim for the benefit under Section 80 was rejected due to the lack of reasonable cause justifying the non-payment of service tax over a period of 5 to 6 years. Consequently, the appeal was dismissed, affirming the order under challenge.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

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