Renting of immovable property

[vasudevan unnikrishnan]

In the pre negative list period ,shop rooms were given on rent for 2 years.However,tenant did not remit the rent afetr six months and also did not vacate after the agreement period .Tenant closed the Shop and rooms remained locked . Civil case in the matter is decided in favour to get it vacated and settle the rental dues. The service tax was paid for the rent received.Dept has issued demand for the tax on the rent not received during 2009-13.Here till April,2011 no tax is to be paid as no rent was received.Subsequent period also ,no invoice/bills were issued .Here the issue is whether tax is payable on accrual basis?.The space was not legally let out after agreement period,the space was not used 'for furtherance of business or commerce' ,being locked.and under Civil case.Adjudicating authority has confirmed demand rejecting the pleas and imposed penalties under sec.77 and 78. Obliged to know expert views on the matter.

AI Summary

Service Tax Dispute: Obligation to Pay on Unreceived Rent for Vacant Shop from 2009-13 Sparks Debate A query was raised regarding the obligation to pay service tax on rent not received for a shop that remained locked after the tenant failed to pay rent and vacate post-agreement. A civil case ruled in favor of vacating and settling dues. The tax department demanded service tax for 2009-13, despite no rent being received. An adjudicating authority confirmed the demand and imposed penalties. An expert explained that service tax is payable on an accrual basis post-April 2011, with the court judgment acting as an invoice. Another view suggested that service tax is not applicable for the vacant period as no service was provided.