CA Gautam Joshi

Like some lives, some taxes are infected inheritably.

Renting of Immovable Property is one such tax under the net of Service Tax law. The levy was under controversy since years and eventually turned off as deemed levy and adding more pain levied from retrospective date. However for rehabilitation of service tax law in this regard the Section 80(2) was introduced in budget 2012-13.

Section 80 (2) of the Finance Act, 1994 as introduced in Budget 2012-13 (got parliament assent on 28/05/2012) states that notwithstanding anything contained in the provisions of Section 76, 77 or 78, no penalty shall be imposable on the assessee for failure to pay service tax payable, as on 06/03/2012, on the renting of immovable property service, if the assessee proves that there was reasonable cause for the said failure and service tax along with interest is paid in full within a period of 6 months from 28/05/2012 i.e on or before 27th November 2012.

The Government has quite happily given the relief from the whole of penalty on failure to pay service tax on renting of immovable property. However, the field authorities, naturally following their duties quite seriously, has continued to issue show cause notices to service providers not paying service tax on renting of immovable property. Recently, DGCEI has issued notices and taking written statements from all APMCs throughout Gujarat State and were insisting for levying of service tax since 2006-2007 on renting of immovable property. The only option remains with such tax payers is to pay full service tax along with interest till date of payment and 25% of service tax as penalty under Section 78(1) to save 75% of penalty.

Looking to the interests of tax payers who already paid 25% penalty and asking for relief, the Government shall voluntary give them the benefit of Section 80(2) and refund 25% penalty already paid. This practice will keep genuine tax payer’s faith alive in government.

The tax payers who have still not paid the service tax shall not wait till 27th  November, 2012  the last date and pay the tax alongwith interest as soon as possible to avoid 100% penalty on outstanding service tax.

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January 2021