Service Tax Is Leviable On Renting Of Immovable Property: CESTAT

The Bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has opined that unless the levy of service tax on renting of immovable property service is held to be ultra vires by any constitutional court, it will continue to be a valid levy.

The assessee/appellant was registered with the service tax department. During the course of scrutiny of its ST-3 returns, it was found that the assessee was not paying service tax on the gross amount of income received as “renting on immovable property”.

A show cause notice was issued to the assessee proposing to recover the service tax under section 73 (1) of the Finance Act with interest and penalty.

The Assistant Commissioner passed the order confirming the demand of service tax as proposed under section 73(1).

Aggrieved by the decision of Assistant Commissioner the assessee filed an appeal to the Commissioner (Appeals) who rejected the appeal. The assessee has challenged the order passed by the Commissioner (Appeals) before the Tribunal.

The bench disagreed with the contention of the assessee that the renting of immovable property cannot be considered as a service and, therefore, no service tax could be levied by the Central Government.

The bench opined that unless the levy of service tax on renting of immovable property service is held to be ultra vires by any constitutional court, it will continue to be a valid levy. As a creation of the law, this Tribunal has to follow the law and cannot go beyond its four corners.

In view of the above, the Tribunal dismissed the appeal.

Case Title: Satnam Kaur v. Commissioner of Central Excise and Service Tax

Case Number: SERVICE TAX APPEAL NO. 53769 OF 2014

Counsel for Respondent/ Department: Manoj Kumar

Click Here To Read/Download The Order