Applicability of service on rent - unregistered

[chaganti srinivas]

Dear Sirs, Rent collected but not paid Service tax. Later date, registered with Service tax and started paying the Service tax. Is it required to pay service tax even if it is not registered with dept?.

[Rama Krishana]

As on today, the matter is pending with the Supreme Court to decide whether service tax is payable on renting or not. IN view of Delhi high court you are not liable to pay service tax. On the contrary as a matter of principle, where you are liable to pay service tax, you can not escape from your statutory liability on the ground non registration. Therefore, where the service tax is payable for the period you remain unregistered, you have to pay service tax. However, you can challenge the demand itself u/s 73 where the demand is beyond the normal period of limitation of one year.

AI Summary

Service tax liability on rent: failure to register does not relieve past tax obligations; limitation challenges may still be available. Where renting services are taxable, a provider who collected rent but remained unregistered remains statutorily liable to pay service tax for the unregistered period; non-registration does not absolve the tax obligation. The legal question whether renting attracts service tax was unsettled, and taxpayers may challenge retrospective demands on limitation grounds when the demand exceeds the normal limitation period.