2025 (12) TMI 1465

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....r to do an act" provided by VVNA is taxable under Declared Service as defined under Section 66E (e) of the Finance Act, 1994 on which appellant was liable to pay service tax under reverse charge mechanism. On being pointed out, the appellant produced service tax payment Challans for Rs.6,48,359/- by VVNA under the category of Renting of Immovable Property Service. It was also found that the appellant had received legal service from July 2012-June 2017 on which they had not paid service tax under RCM. Accordingly, the department issued a show cause notice on 26.03.2018 demanding service tax of Rs.8,90,000/- (including Swachh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC)) under Section 66E(e) and service tax of Rs.73,840/- on legal service under proviso to Section 73(1) of the Finance Act, 1994, along with interest and penalty under Section 76, 77(2) and Section 78 of the Finance Act, 1994. The said show cause notice was decided by the Assistant Commissioner vide order dated 31.03.2019 wherein, he confirmed demand of service tax as proposed in the show cause notice along with interest and imposed equal amount of penalty under Section 78 of the Finance Act, 1994. He also imposed pena....

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....n act or a situation, or to do an act In terms of this entry, the following activities if carried out by a person for another for consideration would be treated as provision of service. * Agreeing to the obligation to refrain from an act. * Agreeing to the obligation to tolerate an act or a situation. * Agreeing to the obligation to do an act." e) For charging service tax under Section 66E(e), all three conditions should be satisfied. From the settlement deed between them and VVNA, it can be seen that neither party has refrained from doing any particular act or things, or have imposed any conditions or circumstances and/or have to perform any act under any law for the time being in force. Therefore, finding of the Adjudicating Authority in para 14.2 is prima facie wrong. Both the authorities presumed that there was a contract having built in clause which refrained parties from bringing in arbitration. f) The settled amount of Rs.60 Lakhs paid by the appellant to VVNA was not on account of any consideration to refrain from an act or to tolerate an act or situation or for doing an act. Both the parties voluntarily and mutually agreed at th....

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....They rely on the following cases:- * Order dated 18.01.1995 of Hon'ble Supreme Court in the case of Collector of Central Excise Vs. HMM Limited * Order dated 13.01.2003 of Hon'ble Supreme Court in the case of Easland Combines Vs. Collector of Central Excise, Coimbatore * Order dated 28.03.1995 of Hon'ble Supreme Court in the case of Pusham Pharmaceuticals Co. Vs. Collector of Central Excise, Bombay, * Order dated 06.09.1994 of Hon'ble Supreme Court in the case of Cosmic Dye Chemical Vs. Collector of Central Excise, Bombay. In view of the above, they prayed that the impugned order may be set aside and their appeal may be allowed. 3. During hearing, learned Counsel emphasized that there was dispute of rent between them and VVNA since 2007 which was not paid by the appellant. The total outstanding yearly rent bill from 2007-08 to 2015-16 along with 18% penalty was calculated to be Rs.98,89,656/-. The dispute was mutually settled before the Hon'ble Principal Civil Judge of Anand Court and a settlement deed dated 28.04.2016 was executed between both the parties, as per which, they paid Rs.60 Lakhs to VVNA in three equal instalments and VVNA paid....

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....mount following settlement agreement between them and VVNA. The said services of Nagar Palika fall under Declared Service on which appellant was required to discharge service tax under RCM basis. He justifies his say by mentioning that outstanding dues between VVNA and the appellant till 2015-16 were Rs.98,89,656/- against which only Rs.60 Lakhs was paid which means that the balance amount of approximately Rs.39 Lakhs has been written off. In other words, this amounts to agreeing to tolerate an act or agreeing to refrain from act. Therefore, the appellants are liable to make payment of service tax under Section 66E(e) on RCM basis. 5. Heard both the sides. The short issue in this matter is that whether amount of Rs.60 Lakhs paid by the appellant to VVNA in accordance with settlement deed dated 28.04.2016 is towards outstanding rent or a consideration for tolerating an act. The appellant has submitted copies of the Challans showing amount of service tax paid by VVNA under the category of Renting of Immovable Property Service on receipt of settlement dues of Rs.60 Lakhs. As per him, these dues pertained to rent for the period from 2007-08 to March 2016 to be paid by the appellant ....