Ashok Enterprises vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 126-2011 dated 26/08/2011 passed by CCE(Appeals), Mangalore]

For approval and signature:

HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

ASHOK ENTERPRISES DR.JAWALI COMPLEX SUPER MARKET, GULBARGA 585101 Appellant(s)

Versus

Commissioner of Central Excise, Customs and Service Tax BELGAUM NULL NO. 71...CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, - 590001 KARNATAKA Respondent(s)

Appearance:

Shri PRADYUMNA G.H., Advocate NO. 244, 1ST CROSS, Banashankari 3rd Stage, 2nd Block BANGALORE - 560085 KARNATAKA For the Appellant

Shri Mohd. Yusuf, Addl. Commissioner(AR) For the Respondent

Date of Hearing: 06/05/2015

Date of Decision: 06/05/2015

CORAM:

HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

Final Order No.21087-21088 / 2015

Per : B.S.V.MURTHY

The appellant had rented out their immovable property to M/s. National Insurance Co. Ltd, M/s. M/s. SPICE Telecom, M/s. Bharti Mobiles Ltd. and M/s. Savi Associates. Among these tenants, M/s. Savi Associates has taken the portion of the premises for running a hotel. Considering that the appellant is liable to pay service tax, proceedings were initiated. As a result of proceedings, service tax of totaling to Rs.7,11,232/- with interest for the period from June 2007 to January 2010 has been demanded and penalty has been imposed.

2. Heard both the sides. It was submitted that even though the appellant had submitted that they were not liable to pay service tax on the portion of the premises rented out for running the hotel, the plea has been totally ignored and if this is considered the demand would come down substantially and the amount more than Rs.4.4 lakhs paid by them would cover the entire amount of service tax payable with interest if the cum-tax benefit is extended. It was also submitted that as per the provisions of Section 80(2) introduced in the Finance Act, 2012, if the tax and interest are paid with 6 months from the date of enactment, no penalty would be leviable. In this case much before the Section 80(2) of Finance Act was introduced, the appellant had paid the entire amount of tax and interest. Further it was also submitted that there were conflicting views regarding liability under the category of renting of immovable property service during the period involved in the present case and therefore there was reasonable cause for non-payment of tax and hence penalty can be waived by invoking the provisions of Section 80 of Finance Act also.

3. I have considered the submissions. On going through the impugned order-in-appeal, I find that the claim of the appellant that a portion of the premises was rented out for running the hotel to M/s. Savi Associates has not been considered on the ground that the definition of renting of immovable property service covers the renting of premises for commercial purposes without considering the part of the definition which provides for exclusions for certain categories. On going through the definition, I find that the definition excludes buildings used for the purpose of accommodation, including hotels   . It has not been disputed by the lower authorities that the portion of the premises rented out to M/s. Savi Associates has been used for running a hotel. Therefore the rent collected from M/s. Savi Associates has to be excluded for the purpose of collection of service tax. I also agree with the submission that the appellant is entitled to cum tax benefit. If the amount already paid covers the amount of service tax payable with interest, it can be said that appellants have fulfilled their obligation under the law in its entirety. This observation is made taking into account the provisions of Sections 80(1) and 80(2) of Finance Act, 1994. Since I consider that appellants had reasonable cause for non-payment of tax during the relevant time, therefore penalty is not imposable. Even otherwise provisions of Section 80(2) would also apply to the appellant.

4. In the result, the impugned order is set aside and the matter is remanded to the original adjudication authority solely for the purpose of quantification of the demand and correctness of the amount paid by the appellant. Appeals are allowed by way of remand.

(Order pronounced and dictated in open court)

B.S.V.MURTHY TECHNICAL MEMBER Raja 4