At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
For Petitioner: Harisudhan, Consultant And For Respondents: A. Cletus, Addl. Commissioner (AR)
1. Brief facts are that the appellants developed a multi-storied and multi-tenanted commercial space which was rented out to various companies engaged in services of information technologies. The appellants were not discharging service tax on maintenance charges collected from the clients for which show cause notice dated 29.7.2009 for the period 1.4.2006 to 31.5.2007 was issued proposing to demand service tax, interest and for imposing penalties. After adjudication, the original authority confirmed the demand, interest and also imposed penalty under section 78 of the Finance Act, giving an option of reduced penalty under the provisions of law. Aggrieved, the appellants are before this Tribunal.
2. On behalf of the appellant, Ld. consultant Shri Hari Sudhan submitted that for a different period the very same issue was decided by the Tribunal in the appellants own case vide Final Order No. 40866/2017 dated 25.5.2017. The Tribunal had upheld the demand, interest and set aside the penalty and also directed for denovo adjudication for the limited purpose of recalculation of demand giving the benefit of CENVAT credit. Ld. consultant argued that the present show cause notice is for a subsequent period and that the department has invoked the extended period of limitation alleging suppression of facts. That the appellant was under bona fide belief that they are not liable to pay the service tax since the maintenance charges were collected along with rent and during the relevant period, the levy of service tax on renting of immovable property was under dispute. The appeal filed by the appellant against the adjudication order for the earlier period was pending before the Tribunal. That since the appellant was still litigating the issue, it cannot be said that appellants have suppressed the facts with intent to evade payment of service tax. Further, he pleaded that the penalties may be set aside.
3. The Ld. AR Shri A. Cletus strongly opposed the plea to set aside the penalties. He submitted that the department had issued letters/reminders to the appellant to furnish details and only after such repeated letters did the appellant furnish the details to quantify the demand for the relevant period. Since the appellant has not furnished details as required for by the department was guilty of suppression of facts.
4. Heard both sides.
5. The issue whether appellant is liable to pay service tax under the category of maintenance of repair service has been decided by the Tribunal in the appellants own case cited supra. The Tribunal in the said case had remanded the matter for the limited purpose of recalculation of net tax liability after giving the benefit of CENVAT credit to the appellants. Further, the appellant is a State Government Corporation primarily set up for promoting IT and IT enabled services. This being so, nefarious intention to evade payment of service tax cannot be expected from them. In the present case, the department had issued an earlier show cause notice on the very same set of facts and allegations. Therefore, they cannot allege suppression of facts with intent to evade payment of service tax. The contention of the Ld. AR that the appellant had not furnished details as required by the department does not hold water for the reason that the letter requesting for details has been issued by the department only on 13.12.2007 which is much after the normal period. Taking these facts into consideration, we are of the view that the penalty imposed is unwarranted and requires to be set aside, which we hereby do.
6. In the result, following the decision of the Tribunal i
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n the appellants own case vide Final Order No. 40868/2017 dated 25.5.2017, the demand is upheld and the adjudicating authority is directed to recalculate the demand giving the benefit of CENVAT credit if any. Penalties imposed are set aside. 7. The impugned order is modified and the appeal is disposed of in the above terms. (Operative portion of the order was pronounced in open court.)