Mec Shot Blasting Equipment Ltd. Vs Commissioner (CESTAT Delhi)
Service tax cannot be levied under RCM for letting out of residential property by Director to Company
The CESTAT, Delhi in the matter of M/s Mec Shot Blasting Equipment Ltd v Commissioner, CGST [ORDER NO. 50626 / 2022 dated July 18, 2022] has held that the service tax cannot be levied on the company for payment of rent to the director unless such premises are used for commercial purpose.
Facts:
M/s Mec Shot Blasting Equipment Ltd (“the Appellant”) has registered with the Service Tax Department and deposits service tax regularly. A demand of Rs. 70,140/- was raised by the Commissioner (“the Respondent”) under Reverse Charge Mechanism (“RCM”) for residential premises, taken on rent by the Appellant from the Director and have been used by the Appellant as residence for its directors.
Further, there was another demand for Rs. 29,209/- for non-payment of Service Tax, which was not paid due to over site, as there are several transactions and otherwise, they were regularly paying service tax. Thus, there is no element of suppression.
Issue:
- Whether the Appellant was liable to pay service tax under RCM of Rs. 70,140/- for residential premises, taken on rent by the Appellant from the Director and have been used by the Appellant as residence for its directors?
- Whether the Appellant is liable to pay service tax of Rs. 29,209/- on renting of immovable property service.
Held:
The CESTAT, Delhi in [ORDER NO. 50626/2022 dated July 18, 2022] has held as under:
