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TMI Blog2023 (12) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... n 75 of the Act. (iii) I hereby impose a penalty of Rs.31,70,392.00 (Rupees Thirty One Lakhs Seventy Thousand Three Hundred Ninety Two only) upon the Noticee under Section 78 of the Act for the period from July'12 to March'14. (iv) I also impose a penalty of Rs.5,52,257.00 (Rupees Five Lakhs Fifty Two Thousand Two Hundred Fifty Seven only), upon the Noticee under Section 76 of the Act for the period from April' 14 to March'15. (v) I also impose a penalty of Rs.10,000.00 (Rupees Ten Thousand only) upon the Noticee under Section 77 of the Act. (vi) I hereby also demand Late Fee of Rs.1,20,000.00 (Rupees One Lakh Twenty Thousand only) for non-submission of ST-3 returns under Section 70 of the Act read with Rule 7C of the Rules, as discussed above." 2.1 Appellant has been giving the premises situated at Krishi Pradarshini, Aligarh on rent to different vendors/persons for carrying out business from that premises. The premises comprises of certain constructed shops and vacant land which is used for providing the space for parking of sand/soil filled trucks and vehicles. Revenue was of the opinion that the activities undertaken by the appellant are taxable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.00 2.4 This show cause notice also proposed to demand interest under Section 75 and proposed imposition of penalties under Section 77 and 78 of the Finance Act, 1994 and penalty and late fee are imposed for non-submission of ST-3 returns under Section 70 of the Act read with Rule 7C of Service Tax Rules, 1994. 2.5 Subsequently, a statement of demand dated 22.03.2016 was issued seeking to demand of service tax, which is as follows:- IN CASE OF CONSTRUCTED SHOPS/BUILDING: Period Amount of Rent collected (IN Rs.) Rate of Service Tax Service Tax payable (including Ed. Cess & S.H. Ed. Cess) (In Rs.) April, 2014 to March, 2015 59,31,290.00 12.36% 7,33,107.00 TOTAL 59,31,290.00 12.36% 7,33,107.00 IN CASE OF VACANT LAND: Period Amount of Rent collected (IN Rs.) Rate of Service Tax Service Tax payable (including Ed. Cess & S.H. Ed. Cess) (IN Rs.) April, 2014 to March, 2015 3,87,49,700.00 12.36% 47,89,463.00 TOTAL 3,87,49,700.00 12.36% 47,89,463.00 Grand Total:- Period Amount of Rent collected (IN Rs.) Rate of Service Tax Service Tax payable (including Ed. Cess & S.H. Ed. Cess) (IN Rs.) April, 2014 to March, 2015 4,46,80,990.00 12.36% 55,22,570.00 2.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the impugned order along with the submissions made in the appeal and during the course of argument. 4.2 We do not find any merits in the submissions of the appellant that the order has been passed in violation of the principles of natural justice. Commissioner has in para no.16 of the impugned order observed as follows:- 16. Noticee was given five opportunities of Personal Hearings, which were duly received by them. The details have been given supra, in the hearing records of P.H.; but not attended by them. Hence I am left with no option but to decide the case on the basis of available records. I also observe that it cannot be termed a violation of principles of Natural Justice in view of Hon'ble Supreme Court's decision in case of F.N. Roy Vs. Collector reported in 1983 (13) ELT 1296 (SC), wherein it has been held that if the party concerned does not avail of the opportunity of personal hearing, the decision without hearing in such case cannot be treated as any violation of the principles of natural justice. Similar view was taken by Hon'ble Apex Court in the case of Jethmal Vs UOI reported in 1999(110)ELT379 (SC). Further Section 33A of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment, (ix) a local authority, or (x) every artificial juridical person, not falling within any of the preceding sub-clauses. (41) "renting" means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property. (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale. gift or in any other manner, or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim : (b) a provision of service by an employee to the employer in the course of or in relation to his employment: (c) fees taken in any Court or tribunal established under any law for the time being in force. Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment because Tehsildar/ Addl. District Magistrate are the officials of District Administration under a State Government. Furtner, certain services have been kept out of purview of levy of Service Tax under Section 668 of the Act, which have been provided in the Negative List of Services under Section 66D of the Act. The services provided by Government or a local authority during the disputed period, which have been specifically excluded from levy of service fax have been enumerated in clause (a) of Section 66D of the Act, which is reproduced below: SECTION 66D. Negative list of services.-The negative list shall comprise of the following services, namely:- (a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere- (i) services by the Department of Posts by way of speed post, express parcel post. Ife insurance and agency services provided to a person other than Government; ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport: iii) transport of goods or passengers: or (iv) support services, other than services covered under clauses (i) to (iii) ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 14 to March 15 and penalty under Section 77 of the Act. Further, Noticee has also not filed six statutory ST-3 Returns from the period July'12 to March 15, as such they are also liable to pay Late Fee of 1.20,000.00 under the provisions of Section 70 of the Act read with Rule 7C of the Rules. Further, the penalty imposable under Section 76 of the Act is 10% of the Service Tax evaded during the relevant period." 4.4 Definition of 'Renting of Immovable Property" has been reproduced by the Commissioner hence, it is not being. It is noted that 'Renting of Immovable Property' is a declared service as per Section 66 (E) of the Finance Act, 1944. Erstwhile Section 66 (105) (zzzz) of the finance Act, 1994 as the same it stood prior to the amendment made by the Finance Act, 2012, defined Renting of Immovable Property as follows:- "90a "renting of immovable property" includes renting, letting, leasing, licensing 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 educatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the definition as it existed prior to the amendment made by the Finance Act, 2012, Allahabad Bench has vide Final Order No.70230 of 2020 dated 20/02/2020 has observed as follows:- "2. The service tax demand stands confirmed against the appellant under the category of 'Renting of Immovable Property'. We note that in the appeal memo, the appellants through their authorized representative have submitted that they are not disputing their liability to pay service tax but the request is only on the ground of invocation of extended period, inasmuch as, in the same assessee, we have held that the appellant was under legal obligation to discharge their service tax liability under 'renting of immovable property'. 3. -------- 4. We note that the demand stands raised for the period 01.06.2007 to 30.03.2012 vide show cause notice dated 30.11.2012 i.e. by invoking the longer period of limitation. We have already held in the case of same assessee that in the light of the fact that issue involved was a bonafide issue of interpretation and in the absence of any evidence of malafide on the part of the assessee, longer period of limitation would not be available to the Revenue. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om payment of service tax. The activities undertaken by the appellant are in nature of commercial activities or a consideration for providing certain income. We do not find any merits in the arguments advanced by the appellant to affect that for the reason that they are registered under Section 12AA of Income Tax Act, this exemption should be allowed to them. In our view this exemption Notification is not available to the appellant. 4.10 Similar views have been taken by the Mumbai Bench of this Tribunal in the case of 2017 (5) GSTL 408 (Tri.-Mumbai) para-4 of the said order is reproduced bellow:- "4. We have carefully considered the submissions made by both the sides. We find that under the category of renting of immovable property, the service is taxable, if the property is rented out for the purpose of business or commerce. In the present case even though the appellants are charitable trust, the immovable property rented out is undisputedly for the purpose of commerce or business. There is no specific exemption notification in respect of renting of immovable property by a charitable trust. Therefore, the service tax is clearly leviable on the services of renting of immovable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant seems to be in a position to claim support from the view taken in Bright Brothers Ltd. case (supra) and Star Glass Works case (supra). 6. We also find a valid point in the submission of the ld. SDR that the demand of duty for the extended period cannot be resisted by the appellants on the premise that whatever duty paid by them would ultimately be available as Modvat/Cenvat credit to the buyer. The submission of the ld. SDR is well-founded vide Jay Yuhshin Ltd. (supra)." 19. The provisions of proviso to Section 73 (1) of Finance Act, 1994 are pari pasu and pari materia to the provisions of proviso to Section 11A of the Central Excise Act, 1994. The intention to evade payment of tax is clearly manifest and articulated by the non-disclosure of the details of the provision of services and receipt of consideration. Non-filing of ST-3 returns for such a long period i.e, from March 2006 to March 2010 will make the intent to evade tax obvious. So invocation of extended period is justified, consequently, the imposition of penalty are also required to be upheld." 4.12 We do not find any merits in the submissions made by the appellant either on merits or on the issue of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty imposed under the two sections and hence the penalties imposed under these sections for different periods cannot be faulted with. Further Hon'ble Supreme Court has in case of Rajasthan Spinning and weaving Mills [2009 (238) ELT 3 (SC)] held as follows: "17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to sub-section 1 of Section 11A and Section 11AC use the same expressions : "....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...". In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. The assessee on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act') taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the "Rules') and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund & Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under section 271(1)(c) of IT Act, Section 11AC of the Act and Rule 96ZQ(5) of the Rules is common. According to the Division Bench the correct position in law was laid down in Chairman, SEBI's case (supra) and not in Dilip Shroff's case (supra). Therefore, the matter was referred to a larger Bench." After referring to a number of decisions on interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated "which he knows or has reason to believe". The said clause referred to wilful action. According to learned counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should not exceed a particular limit, that itself indicates scope for discretion but that is not the case here." 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides." Section 78 is pari material with Section 11AC of the Central Excise Act, 1944. Since we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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