Renting of Immovable Property subject to Service Tax: CESTAT [Read Order]
The bench stated that the service tax charge on immovable property rentals will remain a legitimate levy unless it is ruled to be beyond the scope of constitutional law by any court
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The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax is leviable on renting of immovable property. The two-member bench of Dr. Rachna Gupta ( Judicial Member ) and P.V. Subba Rao ( Technical Member ) has opined that unless the levy of service tax on renting of immovable property service is held to be ultra vires by any...
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax is leviable on renting of immovable property. The two-member bench of Dr. Rachna Gupta ( Judicial Member ) and P.V. Subba Rao ( Technical Member ) has opined that unless the levy of service tax on renting of immovable property service is held to be ultra vires by any constitutional court, it will continue to be a valid levy.
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Satnam Kaur, the assessee/appellant, was registered with the service tax department. During the course of scrutiny of its ST-3 returns, it was found that the assessee was not paying service tax on the gross amount of income received as “renting on immovable property”. A show cause notice was issued to the assessee proposing to recover the service tax under section 73 (1) of the Finance Act with interest and penalty. The Assistant Commissioner passed the order confirming the demand of service tax as proposed under section 73(1).
Aggrieved by the decision of the Assistant Commissioner, the assessee filed an appeal to the Commissioner (Appeals) who rejected the appeal. The assessee has challenged the order passed by the Commissioner (Appeals) before the Tribunal. The bench disagreed with the contention of the assessee that the renting of immovable property cannot be considered as a service and, therefore, no service tax could be levied by the Central Government.
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The bench opined that unless the levy of service tax on renting of immovable property service is held to be ultra vires by any constitutional court, it will continue to be a valid levy. As a creation of the law, this Tribunal has to follow the law and cannot go beyond its four corners.
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While dismissing the appeal, the Tribunal upheld the levy of service tax on the renting of immovable property service by the appellant. Consequently, the appropriate amount of interest has to be paid. The Commissioner (Appeals) has already set aside the penalty under section 78 in the impugned order but upheld the penalty of Rs. 10,000/- under section 77 of the Finance Act.
To Read the full text of the Order CLICK HERE
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