Service Tax need to paid after the service provider Expires?

[Asked by Guest]

Respected Sir,

Rent on Immovable property

Rent received for 4 months from june to sep-16 is 13lakhs
Unfortunately my mother expired in the month of Sep16
We paid service tax till sep-16 of ₹ 168117/- and filing is also done.

My Queries :

1)We have stopped paying service tax after sep16
I have submitted for surrender but the Officier says that
we have to pay service for oct,nov,dec-16.
Do we need to continue paying service tax??
The rent is divided into 3 brothers(legal heirs)
2)Is there any possibility of getting refund?
What is time for applying of refund.

[KASTURI SETHI]

Sh.Venkat Ji,

Go through the following case laws and then decide or post another query :

2015 (322) E.L.T. 372 (S.C.) = SHABINA ABRAHAM Versus COLLECTOR OF CENTRAL EXCISE AND CUSTOMS

Second case law just for knowledge sake

2007 (8) S.T.R. 529 (Tri. - Mumbai) MODERN INDUSTRIES Versus COMMISSIONER OF C. EX., MUMBAI-V

[Ganeshan Kalyani]

Sri Kasturi Sir thanks for sharing the case law. It is very interesting . I have gone through each and every word. It enriched my knowledge . Thanks .

[Ganeshan Kalyani]

The reply is as follows:

1. After Sept 16, the rent income shall be divided into three brothers and the taxability is to be arrived at by considering the basic exemption limit of brothers individually . Since you have paid tax upto Sept16 there is not issue as you have complied properly. The authority should accept the application for surrender of service tax number .

2. Which refund you are discussing about. Pls. elaborate your query in this regard to enable us to supply our reply.

Thanks.

Respected Sir,

Rent received for 4 months from june to sep-16 is 13lakhs,After excemption of 10lakhs,3 lakhs remains ,do we consider service tax for 3 lakhs ??.Actually we paid S.T 168117 /- for 13 lakhs.

For 3 lakhs ST is 45000/- Can i apply for refund of 168117-45000=123117 /-

Thanks & Regards,

K.venkat

[Ganeshan Kalyani]

Sir, i am doubtful. As per the case law cited the deceased assesse cannot be taxed. So whether the refund will be accepted by the Authority for the assessee who is no more , need to be looked into. If i go by the case then surely no, refund cannot be applied .

[KASTURI SETHI]

There is no harm in applying for refund of the excess amount.Govt. has no right to retain amount which is not as per law. Pl ensure that no Govt. dues ( whatever soever may be) are pending against the deceased.

[Ravi Kumar]

yes you have to pay service tax and now apply for cancellation of service tax Registration No.

Respected sir's,

Thanks for your concern let me see by approaching the accessing officer what he says,i will update as soon as I hear from the department.

Regards,

Venkat

[Ganeshan Kalyani]

Sri Venkat Sir, best luck. Refer Notification No. 33/2012 -Service Tax dated 20.06.2012 for basic exemption of Service tax.

[KASTURI SETHI]

Very simple logic, just as an assessee cannot keep Govt. money in its pocket, similarly, Govt. cannot keep assessee's money unauthorisedly, illegally in its kitty.

Respected Sir,

I met the officier he said after mother was expired in sep,16 and after sep16 that we are enjoying the rent so service has to be paid till december 16 to cancel the service tax number.We have surrendered on 28nov16.

Now we are three legal heirs :1) we receive rent of 3lakhs per month from oct to apr17 i.e 6months x 3lakhs=18lakhs.Each person is 6lakhs which is under the 10lakhs,so we are not entitled to pay service tax(According to my knowledge if i am wrong please correct me).

1)Do we need to open service tax number individually even though not entitled to pay service tax till apr17??

2)we have registered "WILL" executed by mother stating that property will be equally shared, Is it enough that rent is shared among 3 legal heirs and service tax is exempted as per law,please advice

Thanks,

venkat

[KASTURI SETHI]

Query-wise reply is as under:-

1. You are right.

2. NO.

3.Yes.

Individual small scale exemption is available provided that separate invoice, separate cheque, separate bank account are are maintained. If rent deed can be separate that is better.

[Ravi Kumar]

• you have to pay all taxes of all incomes until certificate is cancelled..

[RAKESH BHARDWAJ]

Dear Sir,

Your query is not clear. I consider your problem in points and take relevant solution as applied to you :-

1) From your query it is considered that you let out your property from the month of June, on the basis of this your service tax liability is assuming mother is owner and receiver of rent and legal heirs received rent on the behalf of your mother without modifying rent deed, and rent remains same, then your liability is to pay (1300000/4*7) = (2275000-1000000)*15/100=191250 and you have paid 168117 and remaining amount to pay is 23133

The legal heir who receive the rent shall be responsible to pay this liability.

2) If after the death of mother all the legal heirs become the owner of the property and rent deed is modified accordingly then there is no service tax liability on part of legal heirs till each receive share of rent exceeding 10.00 lakh. Hence, you can claim service tax refund from department of an amount rs. 123117 along with interest provided you shall have to pay back this amount of service tax to tenant.

3) You may surrender the license within thirty days of closing to provide service provided all the service tax has been paid and nothing is due.

AI Summary

Service tax liability after provider's death may transfer to legal heirs, affecting surrender and refund claims under exemption rules.
Service tax may be required until the registration is cancelled if the estate or successors continue to enjoy rent; if the property and rent receipts are reconstituted so each heir's share is below the exemption threshold and reflected by separate invoices and banking, heirs may avoid liability. Refunds of excess tax paid can be sought provided all governmental dues are clear, documentary proof of division exists, and surrender follows payment of outstanding liabilities.