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2016 (7) TMI 1126 - CESTAT MUMBAI

2016 (7) TMI 1126 - CESTAT MUMBAI - 2016 (45) S.T.R. 418 (Tri. - Mumbai) - Levy of penalty u/s 76 of the Finance Act, 1994 - Service Tax on Renting of Immoveable Property Service was paid through Cenvat Credit account available on that day along with interest vide GAR 7 Challan - the adjudicating authority as well as the appellate authority held that the payment of service tax made from cenvat credit is not proper for the reason that the service tax dues are pertaining to the period 2007-08 to 2 .....

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he appellant has paid the amount under Section 73 (1)/73 (3) which being pari materia to Section 11A, the Board Circular clearly applies and accordingly there is no restriction to utilize the Cenvat Credit even at later date at the time of payment of service tax. - In the present case the service tax along with interest was paid in the months of February 2011 i.e. before 28.5.2012. Accordingly, the condition specified for non-imposition of penalty under Section 76, 77 & 78 has been complied .....

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ntral Excise & Customs, Nagpur, whereby the Ld. Commissioner (Appeals) upheld the Order-in-Original No. 02/NGP-I/2012/ST dt. 31.10.2012 except for dropping of the penalty under Section 76 of Finance Act 1994, Ld. Commissioner (Appeals) imposed a penalty under Section 76 of the Finance Act, 1994. 2. The fact of the case is that the appellant is engaged in the service of Renting of Immoveable Property during the period 2007-08 to 2009-10. The appellant had rented the premises to various partie .....

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as against the payment of service tax of ₹ 1,37,104/- paid from Cenvat credit account under Section 73(1) read with Section 66,67,68 of the Finance Act, 1994 and Rule 3(4) of Cenvat Credit Rules, 2004, interest under Section 75, and penalties under Sections 76,77 & 78 were also proposed in the show cause notice. The adjudicating authority confirmed the demand of ₹ 1,37,104/- under Section 73 penalties were also imposed of equal amount of ₹ 1,37,104/- under Section 78 and &# .....

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ant. The adjudicating authority as well as the appellate authority held that the payment of service tax made from cenvat credit is not proper for the reason that the service tax dues are pertaining to the period 2007-08 to 2009-10 whereas the appellant have paid service tax from cenvat credit which was available on 31.1.2011. It was contended that as per Rule 3(4) of Cenvat Credit Rules, 2004. The Cenvat Credit available on the last day of the period for which service tax is due can only be util .....

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tter has travelled upto Supreme Court and the landmark judgment was passed in the case of Home Solution Retail Ltd. Vs. Union of India 2009 (14) STR 433 (Del.). To overcome the judgment of Home Solution Retail Ltd. the government has made a retrospective amendment in Section 65 of the Finance Act, 1994. Accordingly, the levy of service tax on renting of immoveable property has been validated from 1st Day of June 2007. It is his submission that the said amendment was enacted on 28.5.2012, therefo .....

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seen that the demand is confirmed under Section 73(1). If any demand is made under Section 73(1), the provisions of Rule 3(4) of Cenvat Credit Rules does not apply. Accordingly, such payment can be made from Cenvat account available on the date of payment even though demand pertains to previous period. In this regard, he relied upon the Board s clarification issue vide Circular No. 962/05//2012-CX.8 dt. 28.3.2012. He further submits that the payment of service tax was made on the pursuance of a .....

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mposed by the adjudicating authority as well as the Commissioner (Appeals) he submits that as per the amended Section 80(2) of the Finance Act, 2012, it was provided that if the service tax on the renting of immoveable property is paid within six months from the date on which the Finance Bill 2012 receives the assent of the Presidents, no penalty shall be imposed under Section 76,77 or 78. He submits that in the present case the appellant have paid the service tax from Cenvat account in February .....

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erty service is pertaining to the period 2007-08 to 2008-09 and it was paid through Cenvat account on 3.2.2011. As per the provisions of Rule 3(4) of Cenvat Credit Rules, 2004, the assessee is required to pay service tax from the Cenvat account only to the extent it is available in the Cenvat account on the last day of the period for which the service tax is due. In the present case, the Cenvat credit utilized was available in the month of February 2011 therefore the same could not have been uti .....

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Belapur 2014 (314) E.L.T. 209 (Tri.-Mumbai). 5. I have carefully considered the submissions made by both the sides. The undisputed fact of the case is that the service tax on renting of immoveable property for the period 2007-08 and 2008-09 was paid by the appellant by utilizing the cenvat credit which was available in February 2011. The said service tax was otherwise under dispute and it became payable only after the retrospective amendment made by Finance Act, 2010 by which clause (zzzz) of Se .....

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, Hingna Road, Nagpur are engaged in manufacture of Inks, falling under Sub Heading having Central Excise registration ECC No. AAACB6602JXM001 and clear the goods to the customer. They are also registered with Service Tax having Registration No. AAACB6602JST001 for GTA. They are also availing Cenvat Credit on Inputs. Capital goods and Input services under Cenvat Credit Rules, 2004. During the course of Audit the Balance Sheet Year 2008-09, 2009-10 of the assessee in schedule "N' - Other .....

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tration under this category avoid Service Tax. The statutory definition as Section 65(90a) of the Finance Act, 1994 as amended till date (90a) renting of immovable property" includes renting, letting, leasing, or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include :- (i) Renting of immovable property by a religious body or to a religious body: or (ii) Renting of immovable property to an educational body, impartin .....

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as follows Financial Year Rent Received on Immovable property (in Rs.) Rate of duty Service Tax Payable (in Rs.) 2007-08 (from 01.06.2007 to 31.03.2008) 5,36,502 @12.36 66,312 2008-09 5,72,748 @12.36 70,792 2009-10 4,89,661 @10.30 50,435 Total 1,87,539 In view of the above the service provider is Required to pay a Service Tax to amounting to ₹ 1,87,539/- (including Ed Cess & SH Ed Cess) under Section 73 along with interest as applicable under section 75 of Finance Act 1994 under intima .....

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it squarely covered under Section 73(3) which provides for payment of arrears of service tax if the same was not paid at the time of due date. From the above, it is clear that the amount paid by the appellant is under Section 73 as arrear that too as per pursuance of the audit officer. The Board in this regard has clarified in the Circular dt. 28.3.2012 which is reproduced below: Payment of arrears from Cenvat credit earned at a later date Circular No. 962/05/2012-CX. 8, dated 28-3-2012 F.No. 26 .....

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e 3(4) of the Cenvat Credit Rules, 2004. As per this proviso, while paying duty of excise or service tax, as the case may be, the cenvat credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be. 2. Doubts have been raised whether these restrictions will be applicable to duty payable in terms of Section 11A or duty paid after due date in ter .....

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restriction with regard to the utilization of cenvat credit is relating to the normal payment of duty in terms of rule 8 of the Central Excise Rules, 2002, where duty for a particular month or quarter is to be discharged by the 5th of the next month. For this proviso, the cenvat credit allowed to be used is what was in balance on the last date of that month or quarter and not what accrued thereafter. Even in case of duty paid late in terms of rule 8, the credit available for utilization will rem .....

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unlike the date prescribed under Rule 8 (i.e., 5th of the next month). Therefore, the restriction on the utilization of the cenvat credit accruing subsequent to the last date of the month or quarter in which the arrears arise, is not applicable to the demands confirmed under Section 11A of the Central Excise Act, 1944. 6. Trade & Industry as well as field formations may be suitably informed. 7. Receipt of this circular may kindly be acknowledged. 8. Hindi version will follow . From the abov .....

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ind that there is a specific provision for waiver of penalty was made in respect of Renting of Immoveable Property service under Section 80(2) the same is reproduced below: 80. Penalty not to be imposed in certain cases. 2(1) Notwithstanding anything contained in the provisions of section 76 3[section 77 or 4[first proviso to sub- section (1) of section 78]], no penalty shall be imposable on the assessee for any failure referred to in said provisions, if the assessee proves that there was reason .....

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