Service Tax
TRT-2025-
Cestat New Delhi
Date:-12-04-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 12 April 2023
Parties: M/s Cords Cable Industries Limited Vs Commissioner, Central Excise Jaipur (Rajasthan)
Facts –
- The Appellant, M/s Cords Cable Industries Limited, is engaged in the manufacture of instrumentation/power cable. During the period from July 2012 to August 2014, the appellant paid towards rent to Naveen Sawhney and D.K. Prashar for the premises let out by them to the appellant. Naveen Sawhney and D.K. Prashar also happen to be the Directors of the appellant.
- A show cause notice dated 28.01.2016 was issued to the appellant invoking the extended period of limitation alleging that during July 2012 to August 2014 had paid the rent to the landlord/owner of the premises and they happened to be, at the relevant time, Director of the appellant and, therefore, service tax was payable by the appellant on reverse charges basis.
- It was further alleged that the appellant had not obtained registration for “renting of immoveable property‟ services nor filed any ST-3 return for the said services.
Issue –
- Whether the appellant is required to discharge service tax on rent paid?
Order –
- The Tribunal observed that the premises which were let out to the appellant are owned by Naveen Sawhney and D.K. Prashar in their individual capacity and it is not the case of the Director that the properties were owned by them as Directors of the appellant. Merely because they also happen to be the Directors of the appellant would not mean that they had collected rent as Directors of the appellant.
- It was held that the appellant, in such a situation, could not have been asked to pay service tax on a reverse charge mechanism. What needs to be further noticed is that service tax had been deposited on the rent received by Naveen Sawhney and D.K. Prashar from the appellant.
- The Appeal was allowed.
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