The CESTAT, Delhi in the matter of M/s Mec Shot Blasting Equipment Ltd v Commissioner, CGST [ORDER NO. 50626 / 2022 dated July 18, 2022] has held that the service tax cannot be levied on the company for payment of rent to the director unless such premises are used for commercial purpose.
Facts:
M/s Mec Shot Blasting Equipment Ltd (“the Appellant”) has registered with the Service Tax Department and deposits service tax regularly. A demand of Rs. 70,140/- was raised by the Commissioner (“the Respondent”) under Reverse Charge Mechanism (“RCM”) for residential premises, taken on rent by the Appellant from the Director and have been used by the Appellant as residence for its directors.
Further, there was another demand for Rs. 29,209/- for non-payment of Service Tax, which was not paid due to over site, as there are several transactions and otherwise, they were regularly paying service tax. Thus, there is no element of suppression.
Issue:
- Whether the Appellant was liable to pay service tax under RCM of Rs. 70,140/- for residential premises, taken on rent by the Appellant from the Director and have been used by the Appellant as residence for its directors?
- Whether the Appellant is liable to pay service tax of Rs. 29,209/- on renting of immovable property service.
Held:
The CESTAT, Delhi in [ORDER NO. 50626/2022 dated July 18, 2022] has held as under:
- Observed that, no service tax is chargeable, unless the premises are taken and used for commercial purpose. Thus, service tax is not chargeable.
- Held that, for other demand the situation is wholly revenue neutral and accordingly, invocation of extended period of limitation is not available to the revenue in the facts and circumstances.
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
We have recently released the 7th Edition (May, 2022) of our book on Goods and Services Tax, titled, “GST LAW AND COMMENTARY – WITH ANALYSIS AND PROCEDURES”, updated with the Finance Act, 2022 in a set of 4 Volumes. We thank you all for the support and your enduring response.
Have a look at the complete tour of the Book at: https://cutt.ly/nF6O0oN
Order your copy now and be a part of the GST learning excursion in the most comprehensive and lucid form !!
For more details and purchase online at: https://cutt.ly/RFMox8D