SAMIR RAJENDRA SHAH Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant is in appeal against the impugned order demanding service tax on security deposit paid on Renting of Immovable Property, the lower authorities not quantified the interest on service tax paid by them and consequent penalties imposed on them.

(2.) BRIEF facts of the case are that the appellant is owner of immovable property and the same was given on rent to various parties. As per the agreement entered between the lessee and the owner, the lessee has to pay some amount towards security deposit and monthly rent on the agreed terms. There was a clause in the agreement that the service tax shall be borne by the lessee. In these set of facts, demand of service tax was confirmed against the appellant on the total amount i.e. security deposit and rent received by the appellant from lessee during the period 01.06.2007 to 31.03.2012. During adjudication, the appellant pleaded that they should be given the benefit of Section 80(2) of the Finance Act, 1994 as they have paid the entire amount of service tax prior to 28.11.2012 therefore, penalties cannot be imposed. Adjudication took place and service tax was demanded on whole of the amount of security deposit and rent received from the lessee by the appellant and benefit of Section 80(2) was not given to the appellant. Aggrieved by the said order, the appellant is before us.

(3.) THE learned Counsel appearing on behalf of the appellant submits that no service tax is payable on the security deposit received by the appellant from the lessee as the said amount is refundable at the time of termination of lease/rent agreement of the property. Therefore, the same does not form a part of services provided by the appellant. It is further submitted that the appellant was under bonafide belief that the service tax on renting of immovable property is not payable by them as the dispute, whether on renting of immovable property the service is taxable, is still pending before the Hon'ble Apex Court. Therefore, they have not collected the service tax from the lessee. In these circumstances, the amount collected by the appellant as rent may be treated as cum -service tax amount. If this is to be taken into consideration then they have paid the whole of the service tax before 28.11.2012 therefore, they are entitled for the benefit of Section 80(2) of the Finance Act, 1994. In these circumstances, he prays that the impugned order is required to be set aside.