The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the service tax cannot be levied on the Company for the payment of rent to the Director if such premises are not used for commercial purpose.
The appellant, M/s Mec Shot Blasting Equipment Ltd was registered with the service tax department and have regularly paid the service tax including service tax paid in cash by challan. The appellant company have taken on rent residential premises from the Director and such premises have been used by the appellant company as residence for its director.
Mr. Anil Choudhary, Member (Judicial) has observed that “no service tax is chargeable, unless the premises are taken and used for commercial purpose. Thus, service tax is not chargeable.”
Quashing the impugned order, the Tribunal held that “Having considered the rival contentions, I find that the demand of tax of Rs. 70,140/- have been wrongly raised as the premises are residential premises and being used for residence of the director. So far the other two demands are concerned, I hold that the situation is wholly revenue neutral and accordingly, invocation of extended period of limitation is not available to the Revenue in the facts and circumstances.”
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