Service Tax on Renting of Immovable Property - Pay Tax with Interest by Nov 27 and avoid penalty
THE Finance Act, 2012 inserted a new Section 80(2) in the Finance Act, 1994 to waive penalty for Service Tax on renting of immovable property if the tax is paid with interest by 27th November 2012.
The new Section 80(2) reads as:
Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President .
The Budget Memorandum explained this provision as,
RENTING OF IMMOVABLE PROPERTY SERVICE:
Constitutional validity of the levy of service tax on renting of immovable property has been the subject matter of litigation leading to pronouncement of court judgments favorable to revenue, including those of Honourable Delhi High Court and Honourable Supreme Court. Taking an overall view, the Government has decided to waive the penalty for those taxpayers who pay the service tax due on the renting of immovable property service (as on 06.03.2012), in full along with interest. For this purpose, a new section 80A [sic - this is 80(2)] is being inserted in the Finance Act, 1994. This scheme of penalty waiver will be open only for a period of six months from the date of enactment of the Finance Bill, 2012.
The Finance Bill was enacted on 28th May 2012 and thus the scheme is open till 27th of November 2012.
It is almost certain that the tax has to be paid on renting and the Government has liberally waived the penalty if the tax is paid with interest by 27th November 2012. This is an opportunity that all service providers should grab to avoid litigation and penalty.
The Government should have given wide publicity to this beneficial legislation, but they are totally silent on this. Are they waiting for the deadline (a line beyond which you are dead) to pounce on the defaulters?
But on Friday, in a seminar organized in Hyderabad by FAPCCI, an Additional Commissioner in Hyderabad II Commissionerate, R S Maheshwari appealed to the FAPCCI to make this known to the trade and to pay up the tax with interest to avoid penalty.