Spirit of law is not to penalize assessee
PURSUANT to the presentation of the Union Budget 2012, the JS (TRU-II) issued letter D. O. F. No 334/1/2012-TRU dated 16th March, 2012 which mentioned -
C.3 Penalty waiver for renting of immovable property service:
17. Recently, Delhi High Court while examining the issue of constitutionality of service tax on renting of immovable property service in the matter of Home Solutions Retail Vs UOI observed that 'on the question of penalty due to non-payment of tax, it is open to the Government to examine whether any waiver or exemption can be granted' [para 73] []. Subsequently, in the matter of Retailers Assn. of India Vs Union of India, Honorable apex court, had ruled on October 14, 2011 [] that litigants should pay 50% of the arrears within six months in three equated installments. For the balance, solvent surety should be furnished to the satisfaction of the jurisdictional commissioner.
18. Against the above backdrop, it is proposed that penalty may be waived for those taxpayers who pay the service tax due on the renting of immovable property service (as on the sixth day of March, 2012), in full along with interest within six months. Section 80A is being introduced for this purpose. Those who fail to avail the benefit will be treated as if this section did not exist.
By the Finance Act, 2012, the following sub-section was inserted in section 80 of the Finance Act, 1994 -
(2) 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.
Now, the question is whether an assessee who paid the Service Tax on Renting of Immovable property along with interest any time before this sub-section was inserted will be entitled for the benefit of waiver of penalty. We came across a case recently wherein the appellant had paid the ST along with interest and penalty in the year 2010, much before the Amnesty came on to the scene. The lower authorities took a view that section 80(2) of FA, 1994 inserted w.e.f 28.05.2012 is effective from that date and any payment made prior to that date is not eligible to get the benefit.
The matter was decided by the Ahmedabad Bench of the CESTAT recently.
The Bench held -
amendment of Section 80 could be applicable to the payment made by assessee even prior to 28.05.2012, as the spirit of the law is to not to penalize the assessees who had defaulted the payment of service tax on renting immovable property, due to ratio of judgment which held field during the relevant period.