Custom, Excise & Service Tax Tribunal
Indore vs E W D P L on 1 October, 2020
1
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Service Tax Appeal No.54141 of 2015
[Arising out of Order-in-Original No.07-08/COMMR/ST/IND/2015 dated 25.05.2015 passed
by the Commissioner, Customs, Central Excise & Service Tax, Indore]
Commissioner of Customs, Central Excise Appellant
& Service Tax
Manik Bagh Palace, Post Box No.10, Indore,
Madhya Pradesh.
VERSUS
M/s. EWDPL Respondent
6th Floor, Treasure Island, 11 South Tukoganj, Main Road, Indore.
APPEARANCE:
Shri R.K. Manjhi, Authorised Departmental Representative for the Deptt./Appellant. Shri Naveen Khandelwal and Shri Sumit Nema, Advocates for the respondent.
CORAM: HON'BLE MR. ANIL CHOUDHARY, MEMBER(JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER(TECHNICAL) FINAL ORDER NO.50850/2020 DATE OF HEARING: 03/12/2019 DATE OF DECISION: 01.10.2020 ANIL CHOUDHARY:
The respondent- assessee is engaged in providing services of renting of immovable property services etc. on lease and licence basis. Service tax on renting of immovable property was proposed w.e.f. 1.6.2007 vide notification no.23/2007-ST.
2. It appeared to Revenue that the respondent being liable to service tax is required to obtain registration under Section 69 and further required to pay service tax amounting to Rs.4,53,94,367/- including the cess, and further, they failed to file half yearly returns and accordingly, demanded 2 vide show cause notice dated 29.06.2010 for the period 01.06.2007 to 31.12.2009, with further proposal to impose penalty under Sections 76, 77 and 78 of the Act. Vide another show cause notice dated 17.02.2011, the service tax was demanded for the subsequent period i.e. 1.1.2010 to 31.12.2010 on the same grounds, with further proposal to impose penalty under Section 76 and 77 of the Act. Addendum dated 17.02.2011 was issued in respect to the first show cause notice dated 29.06.2010, substituting paras 1 and 2 of the show cause notice - particularly mentioning that vide Finance Bill 2010-2011, the amendments have been made in the taxable service in Section 65(105)(zzzz) providing explicitly that the activities of the renting itself is a taxable service and the tax is levied retrospectively w.e.f. 1.6.2007. The respondent/assessee contested the show cause notice on several grounds, inter alia, stating that they are Members of the Retailers Association of India (RAI), and some of their tenants, who were also the Members of the RAI, have approached the Hon'ble Bombay High Court vide writ petition challenging the levy of service tax on renting of immovable property. It was also contended that part of the demand is time barred, as extended period of limitation is not invokable under the facts and circumstances. The assessee had also disputed the charge of tax in view of the stay granted by the Bombay High Court as well as by the Delhi High Court.
3. The ld. Commissioner taking notice of the quashing of the provisions of levy of service tax on 'renting of immovable property' by the Hon'ble Delhi High Court in its ruling in Home Solutions Retail India Ltd. and also took notice of the retrospective amendment brought vide Finance Act, 2010, as mentioned hereinabove, and also took notice of the interim order 3 of the Hon'ble Supreme Court against the judgment of the Delhi High Court in Home Solutions Retain India Ltd. and Others Vs. Union of India, whereby Interim Order dated 4.4.2011, the Apex Court directed the Delhi High Court to hear and dispose of the matter expeditiously. The Hon'ble Delhi High Court by its judgement dated 23.09.2011 upheld the levy of service tax with respect to renting of immovable property for commercial purposes under Section 65(105)(zzzz) read with Section 66 of the Finance Act, as amended by Finance Act, 2010 and further also overruled their earlier judgement in First Home Solutions case.
4. The ld. Commissioner computed the tax liability as follows:-
Particulars June, 2007 to December, 2009 for SCN No.4406 Jan. 2010 to SCN No.22973 December, 2010 Rental Income as per SCN 38,80,81,347 13,45,29,009 Less-Rental Charges received 30942263 7539049 [Deduction allowed only upto from Sarovar Hotel June,2010 in view of Explanation II inserted in Section 65(105)zzzzw.e.f.01.07.2010 (calculated on pro-rata basis).
Gross Taxable Value 357139084 126989960 Less Property Tax Paid 6553423 2743522 Taxable value (cum duty upto 350585662 124246438 December, 2009 Tax Payable 36776071 12797383 Less - Payable by members of 4243009 1642455 Retailers Association of India Payable by the Noticee i.e. 32533062 11154928 EWDPL Less - Paid 32533062 10378406 Difference NIL 776522
5. Accordingly, the ld. Commissioner confirmed the demand as found payable by the respondent /assessee. As regards the show cause notice dated 29.06.2010, penalty under Section 78 was not imposed and penalty of 4 Rs.5,000/- was imposed under Section 77 of the Act for failure to file return.
As regards the show cause notice dated 17.02.2011, penalty was imposed under Section 76 and also Rs.5,000/- under Section 77 for failure to file return. The penalty under Section 78 was not imposed, taking notice of the peculiar facts and circumstances, particularly, the levy of service tax with respect to renting being subjudice before the various High Courts and was finally quashed by Delhi High Court, against which the appeal was entertained by the Hon'ble Supreme Court in view of the subsequent amendment vide Finance Act, 2010, reintroducing the levy with retrospective effect.
6. Being aggrieved, the Revenue is in appeal on the ground that the Commissioner (Appeals) is not justified in dropping the demand amounting to Rs.58,85,465/- as well as non-imposition of penalty.
7. Reiterating the grounds of appeal, the ld. Authorised Representative for Revenue urges that the ld. Commissioner is not justified in holding that the respondent is not liable to pay service tax amounting to Rs.58,85, 465/- (Rs.42,43,009 + 16,42,455) as the Hon'ble Supreme Court has shifted the liability on the service receivers/Members of the Retailers Association of India. The Hon'ble Supreme Court has only granted stay to the service receivers by directing to pay 50% of the tax and to give 'solvent certificate' with respect to the balance, but have not shifted the service tax liability under the Statute. The arrears of tax paid by the Members of the RAI, require to be adjusted against the service tax liability, as determined under Section 73. Thus, the ld. Commissioner has erred in reducing the service tax 5 liability to the extent of service tax paid by the tenants or the Members of the RAI.
8. It is further urged that the ld. Commissioner has erred in not imposing penalty under Section 78, which provides for levy of penalty in case of non- payment of service tax due to mis-representation, suppression, fraud, etc. It is further urged that in spite of the window provided under sub-section(2) of Section 80 vide Finance Act, 2012, the respondent did not pay the entire service tax along with interest, within the prescribed period.
9. Ld. Authorised Representative further places relies on the following case laws:-
(i) 2007 (6) STR 32 (Tri.-Kolkata) - CCE, Kolkata-I Vs.Gurdian Leisure Planers Pvt.Ltd.
(ii) 2005 (188)E.L.T.445 (Tribunal-Chennai) - Trans (India) Shipping Pvt. Ltd. Vs.CCE, Chennai-I.
(iii) 2006 (1) S.T.R. 320 (Tri.-Delhi) - SPIC & SPAN security & Allied Service (I) P.Ltd. Vs. CCE, New Delhi.
10. Opposing the appeal, the learned Counsel for the respondent/assessee supports the impugned order. He further urges that Section 80 of the Finance Act provides for non-levy of penalty in genuine cases, particularly, where there is a reasonable cause for failure to pay tax. Sub-section (2) of Section 80, which was introduced vide Finance Act, 2012, provides an additional window for deposit of service tax along with interest in respect of the service tax for renting of immovable property, within the prescribed period. Thus, on harmonious reading of sub-section (1) and (2) of Section 80, the ld. Commissioner is fully justified in not imposing penalty under Section 78, taking notice of the litigation challenging the levy itself by the 6 Retailers Association of India before the various High Courts as well as stay granted, of which the respondent is also a Member. Further, levy was quashed by the Hon'ble Delhi High Court in the year 2009 and the levy was re-introduced with respective effect, which is again subjudice before the Hon'ble Supreme Court. Further, the law declared by the Hon'ble Supreme Court is binding on all subordinate courts within the territory of India, as provided under the Article 141 of the Constitution of India. Thus, the Commissioner (Appeals) has rightly granted the relief to the respondent/assessee with respect to the 50% of the amounts stayed by the Hon'ble Supreme Court, as hereinabove mentioned.
11. Ld. Counsel further urges that under the facts, there is no deliberate default in payment of service tax. Whatever delay has occurred, which is due to the circumstances, as the levy itself was and is under the challenge by the 'Association' of assessee. Thus, the penalty imposed under Section 76 is also fit to be set aside.
12. Having considered the rival contentions, we find that the ld. Commissioner has given cogent reasons and has recorded the findings that there is no deliberate default on the part of the assessee, in not depositing the service tax. In this view of the matter, we uphold the non-levy of penalty under Section 78 and also dropping of the demand of service tax amounting to Rs.58,85,465/- , in view of the stay granted by the Hon'ble Supreme Court, being Interim Order dated 14.10.2011 in Civil Appeal No.8390 of 2011 and other appeals, in the case of Retailers Association of India Vs. Union of India & Another reported at 2011 TIOL 104 SC-ST. 7
13. We further find that in view of the provisions of Section 76, which provides for levy of penalty, where a person is liable to pay service tax, fails to pay such tax and further, Section 80 provides that where such failure is for reasonable cause, no penalty shall be imposed under Section 76, 77 and 78 of the Finance Act.
14. In this view of the matter, there being reasonable cause for late payment of service tax, we set aside the penalty under Section 76 also.
15. Accordingly, the appeal filed by the Revenue is dismissed. The respondent/assessee shall be entitled to consequential benefits in accordance with law.
[Order pronounced in open court on 01.10.2020] (ANIL CHOUDHARY) MEMBER (JUDICIAL) (C.L. MAHAR ) MEMBER (TECHNICAL) Ckp.