Retrospective Penalty not Leviable for Non-payment of Service Tax on RIPS: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that retrospective penalty will not be leviable for non-payment of service tax on Renting of Immovable PropertyService (RIPS).

In the present appeal, penalties were imposed under Section 76, 77 and 78 of the Finance Act, 1944 with regards to the appellant’s liability to pay service tax under Section 65 (105) and Goods Transport Agency (GTA) service. The department felt that renting of premises situated in Guntur district should be leviable to service tax.

The counsel for the appellant submitted that the Parliament amended the definition of taxable service under Section (105)(zzzz) through the Finance Act, 2010, giving the levy retrospective effect from 01.06.2007. The counsel submits that despite the payment, the department issued show cause notice proposing confirmation of demand and imposition of penalties.

The opposing counsel reiterated that the demand was confirmed and extended period was involved, and the Adjudicating Authority rightly imposed the penalties. The tribunal observed that there was no infirmity in the demands of Service Tax on Renting of Immovable Property Service and the same has not been contested.

However, the CESTAT notes that the penalty is not to be imposed where the liability arises due to retrospective amendment of law, relying on the Supreme Court decision in Star India Pvt Ltd v. Commissioner of Central Excise. The main issue to be determined was whether the penalty is imposable or otherwise, the CESTAT held in the negative.

A.K.Jyotishi (Technical Member) and Angad Prasad (Judicial Member) relied on several other cases like Retailers Associates of India v. Union of India and held that there is no tangible evidence on record to support the claim that non-payment was done deliberately or with an intent to evade. Thus, the penalties cannot be imposed.

Therefore, the penalties were not applicable and liable to be set aside in terms of provisions under Section 80 and non-invokable nature of Section 78. The appeal was disposed of accordingly.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates