Interest on Service tax due

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This query is : Resolved

CHANDRA PRAKASH AGRAWAL (Querist)
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18 November 2010 Our client has leased out a corporate office developed on an Industrial Plot with all the amenities to an MNC.Lessee stopped the payment of service tax on rent from 1/4/2009 till date. Lessor could not deposit the service tax on his own. Now lessee is vacating the premises and ready to pay service tax arrears but he says that interest on service tax shall be leviable from 1/7/2010 and not from 1/4/2009.What is the remedy?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 November 2010 The levy of service tax on renting of immovable property services is re- introduced in the statute by the Finance Act,2010 with retrospective effect from 1/6/2007. Though the service tax liability has been imposed retrospectively, it can be reasonably argued that a bona fide service recipient cannot be called upon to pay interest in respect of the earlier periods up to 1/7/2010,being the effective date of the above said finance act.
Issue remains debatable and to be handled carefully.

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