ST - Renting - vires decided by HC in 2009 - How could a decision rendered in 2009 lead to confusion in 2007 - such a plea is afterthought - in absence of prima facie case on merits, pre-deposit ordered: CESTAT
By TIOL News Service
MUMBAI, JAN 13, 2014: THE appellant is proprietor of M/s. Goyal Developers, Pune. During the period June 2007 to December 2011, the appellant rented out immovable property and received consideration by way of rent. However, the appellant did not discharge service tax liability on the activity of renting of immovable property. It is also on record that the appellant had obtained service tax registration on 18/07/2007 under the category of ‘Renting of Immovable Property Service'. However, apart from getting registered, they did not follow the statutory procedures nor did they pay any service tax.
Accordingly, investigation was carried out and a show cause notice dated 03/09/2012 was issued demanding service tax of Rs.68,84,748/- along with interest thereon and also proposing to impose penalties.
Since the CCE, Pune-I confirmed the demand along with interest and imposed penalties the appellant is before the CESTAT.
The appellant submitted that the vires of the levy were under challenge and in the matter of Home Solutions Retails (India) Ltd., the matter travelled from the Delhi High Court (2010-TIOL-341-HC-DEL-ST) & (2011-TIOL-610-HC-DEL-ST-LB) to the Supreme Court and the court had pending decision in the matter inter alia directed the appellants in that appeal to deposit 50% of the ST demand and balance as surety and hence there was confusion about the levy and, therefore, appellant did not discharge ST and that the FA, 1994 has been amended retrospectively from 01/06/2007 deeming renting as a service activity &in the facts of the case the extended period is not invocable. It is also submitted that the appellant had already made a payment of Rs.31,51,247/- along with interest thereon of Rs.1,42,116/- as against a demand of Rs.68,84,748/- and the same should be considered sufficient for hearing of the appeal and stay be granted.
The Revenue representative submitted that the appellant got registered with the department under the category of ‘Renting of Immovable Property Service' as early as in July, 2007 and hence they cannot plead ignorance of law or confusion about the levy. The law was retrospectively amended in 2010 deeming the activity of renting as a taxable service. In the Finance Act, 2012 it was also provided that if the service tax liability along with interest liability is discharged on or before 26/11/2012, there will not be any penalty on the service providers. Thus, adequate opportunity was provided to the defaulting service providers to discharge service tax liability. In this particular case, the appellant has not chosen to avail the said facility and hence the plea of time bar cannot be accepted and the appellant should be put to terms.
The Bench observed -
"5.1 As regards the vires of the levy, the full Bench Delhi High Court has upheld the validity of the levy and, therefore, on merits the appellant does not have prima facie case at all. Further, the hon'ble High Court of Bombay in the case of Retailers Association of India & Others vs. Union of India (W.P. No. 2238 of 2010) decided on 04/08/2011 - (2011-TIOL-523-HC-MUM-ST) upheld both the vires of the levy as also the retrospective amendment made in the law. Therefore, the vires of the levy is beyond dispute. As regards the argument of time-bare, the fact on record clearly establishes that the appellant did take registration as early as in July, 2007 whereas the Delhi High Court's decision, which is the basis for the appellant's confusion, came up only in 2009. We do not understand how a decision rendered in 2009 would lead to confusion in 2007. Therefore, it is clearly an afterthought adduced by the appellant. Therefore, we reject this claim. The appellant does not plead any financial hardship. In the absence of any financial hardship and in the absence of prima facie case on merits, the balance of convenience lies in favour of Revenue as held by the hon'ble High Court of Andhra Pradesh in the case of SQL Star International Ltd. vs. Commissioner of Customs, Central Excise & Service Tax - (2012-TIOL-146-HC-AP-ST)."
In fine, the appellant was directed to make a pre-deposit of the balance amount of ST confirmed and report compliance.
(See 2014-TIOL-61-CESTAT-MUM)
