2026-VIL-1069-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax liability on renting of immovable property, period of judicial uncertainty, applicability of extended period of limitation - Whether the extended period of limitation can be invoked for demanding service tax on renting of immovable property when the taxability of such service remained under judicial uncertainty throughout the relevant period – HELD - During the period from March 2008 to March 2011, the taxability of renting of immovable property was sub-judice before the Delhi High Court. The initial levy was struck down as ultra vires on April 18, 2009, thereafter retrospectively amended through the Finance Act, 2010, and again stayed on May 18, 2010, with finality reached only on September 23, 2011. The suppression with willful intent to evade service tax cannot be fastened on the appellant as the appellant acted on bonafide belief about non-applicability of service tax and made no charges to the lessees. Being a public sector undertaking, the appellant cannot be said to have any intention to evade taxes - Since the show cause notice was issued on October 9, 2012, prior to the amendment of Section 73 on May 10, 2013, the old legal position applies where no demand can be sustained for the normal period if the extended period is found not invokable. The agreements show the entire factory premises including plant, godowns and land have been leased out, thus the appellant's argument that only land was leased is rejected. However, the absence of any allegation in the show cause notice regarding deliberate suppression, combined with the period of profound legal uncertainty, makes the case fall outside the conditions necessary for invoking the extended period - The entire confirmed demand is set aside on account of time-bar. The appeal is allowed
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