The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no penalty can be imposed under the category of ‘renting of immovable property services’ if any reasonable cause on the part of the assessee for failure in discharging the service tax liability.
Theni Allinagaram Municipality, the respondent-assessee was issued a show cause notice for demanding service tax under the category of ‘renting of immovable property services’, and the adjudicating authority accepted the demand along with interest and not imposed any penalty invoking section 80 of the Finance Act, 1994.
The revenue department appealed against the decision of the adjudicating authority for not imposing any penalty on the failure of discharging the service tax liability.
R. Rajaraman, the counsel for the department contended that the activity of renting of immovable property was not liable to levy of service tax and the services concerning renting of immovable property were taxable. Thereafter, the Government brought forth amendment in the said section vide Finance Act, 2010.
During the hearing of the appeal, none appeared on behalf of the Respondent.
The bench observed that the Commissioner that being a statutory authority, under the Government, there cannot be any malafide intention to evade payment of service tax and there exists reasonable cause on the part of the assessee for the failure in discharging the service tax liability.
The two-member bench comprising Sulekha Beevi C.S.(Judicial) and M. Ajit Kumar (Technical) held that nothing brought out by evidence that the assessee had not paid the service tax with the deliberate intention to evade tax and no penalty can be imposed when any reasonable cause on the part of the assessed on the failure of discharging the service tax liability while dismissing the appeal filed by the department.
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