Case Law Details
CA URVASHI PORWAL
Brief of the Case
In the case of K.R.S. Enterprises (P.) Ltd. VS. Commissioner of Service Tax, Bangalore,it was held that the Tribunal’s decisions are binding on the lower authorities and cannot be ignored on the sole ground that the Revenue may prefer to file appeal against the same before the higher authorities until and unless the same is set aside by a higher forum.
Facts of the Case
The challenge in the present appeal is to penalty of Rs 1 .17 crores imposed upon the appellant under Sections 76, 77 & 78 of the Finance Act, 1994. The appellants have already deposited the service tax in respect of renting of immovable properties before issuance of show cause notice.
It is seen that the issue of leviability of service tax on renting of immovable properties during the relevant period was under dispute and the matter was pending before the Hon’ble High Court of Delhi which ultimately held, in the case of Home Solutions Retails lndia Ltd. v. UOI [2009] 20 STT 129 that renting of immovable property cannot be regarded as service. Subsequently by Finance Act, 2010, w.e.f. 01/06/2007, the renting of immovable property was made liable to service tax with retrospective effect and all the assessees were required to deposit the service tax for the entire period in question.
Contentions of the Assessee
The appellant’s contention is that in such a scenario, no mala fide can be attributed to them when they deposited the service tax before the issuance of the show-cause notice. The assessee also referred to the provisions of sub-section (2) of Section 80 of the Finance Act, which lays down that if service tax along with interest stands paid within a period of 6 months from the date on which the Finance Bill 2012 received the assent of the President, no penalty shall be imposed on the assessee. It is the contention of the assessee that inasmuch as they have paid the service tax either before the said retrospective amendment or within a period of 6 months from the said amendment, no penalty can be imposed upon him in terms of the above sub-section (2) of Section
Held by Hon’ble CESTAT
The Hon’ble CESTAT found that in the case of Faryland Hotels and Resorts (P) Ltd. v. CCE [Final Order No. 50094/2014, dated 7-1-2014] as also in the case of Discovery Holdings (P.) Ltd. v. CST & ST [Final Order No. 50208/2014, dated 21-1-2014, and in the case of Chandresh Shantilal Shah v. CCE & ST [Order Nos. A/11809-11812/2013, dated 19-12-2013] the Tribunal has taken note of the said Section 80(2) of Finance Act, 1994 and has held that no penalty is to be imposed on the assessees.
When the appellant placed reliance on the said decisions of the Tribunal, a very strange reasoning stands adopted by the Commissioner. For better appreciation, the same is reproduced below:
“14.10.7 …..Section 80(2) of the Act is not the point of contention in the case at (c) above and hence, the same is not relevant to the fact of this case. In the cases at (a) and (b) above and the Hon’ble Tribunals held that the benefit of Section 80(2) of the Act is applicable even if the service tax along with interest in respect of Renting services were paid prior to 28.05.2012 also. However, the said decisions of the Hon’ble Tribunals are very latest and involving low revenue matters. The department still has time to prefer an appeal against the such decisions based on the revenue involved. Therefore, I find that it is premature for me to strictly follow the ratio of the said decisions and the case before me involving high revenue matter…….”
On going through the above, it is noted that adjudicating authority, is not disputing the fact of issue relating to penalties being held in favour of the assessee by the above decisions of the Tribunal. However the same has not been followed the same on the ground that amount involved in those cases was on the lower side and they are recent decisions. Law declared by the Tribunal is equally applicable to all the assessees irrespective of the amount involved. The same would not go on changing depending upon the amount involved in a particular case. As such, reasoning adopted by the Commissioner only reflects upon lack of knowledge of law on his part. Further, the Tribunal’s decisions are binding on the lower authorities and cannot be ignored on the sole ground that the Revenue may prefer to file appeal against the same before the higher authorities. It is not the Revenue’s case that such decisions stand challenged by them and stand set aside by the Higher Forum. In view of the foregoing discussion, the Hon’ble CESTAT found no justifiable reasons to impose penalty upon the assessee. The same is accordingly set aside.
