Can landlord ask service tax after 4/5 years

Rakesh (Executive) (21 Points)
Replied 17 February 2015

Confirm the status of registration of Service tax by landlord when he came under liability to pay tax means when his income crossed 10 lacs. During the period of exemption availed he cannot ask to pay the tax.

Rakesh jaiswal

Manoj Punjabi (Accountant) (221 Points)
Replied 17 February 2015

Thank you Mr. Rakesh for your response.

Landlord has come in to liability 4 and half years back, he has paid the tax partly and also sent us the paid challans, there is no doubt on this point.

But he did not inform us about this.

My query is can we fight on the premise that he did not inform us about this liability, which went on accumulating and became a very big amount due to his irresposibility. Now how can we pay such a big amount altogether. He should have immediately informed us as soon as the service tax became applicable to him, and we would have happily paid him the service tax on monthly basis along with rent, that would have been easier and that service tax we could have claimed as expense in our Income Tax returns, but now after five years paying this big amount is just unbearable.

Please guide us, what can we do on this point of his fault or call it his irresponsibilty to inform us about this liability and now his aggresiveness of sending legal notice that either pay or leave the premises. Is he right on this issue? can't we do anything? Can he legally recover this tax from us?

Manoj Punjabi (Accountant) (221 Points)
Replied 19 February 2015

Some one please guide

Prasad (Sr. Manager) (617 Points)
Replied 23 February 2015

Manoj has your owner sent invoices to you month on month

CA Umamaheswara Rao (Chartered Accountant) (72 Points)
Replied 23 February 2015

First refer your rental agreement, see whether rent is inclusive of all taxes or taxes should be payable seaparately.

If rent is inclusive of all taxes then you can orgue that the taxes are paid by you as it is inclusive of all taxes.

Second point is, did he charged service tax separately on rental invoice ?

When service tax is not shown separately in invoice, sums collected by the assessee should be regarded as cum-tax and service tax is to be determined by back calculations.

Conclusion: In my opinion when service tax is not shown separately in the rental invoice, the rent should be considered as inclusive of tax, then he has to pay service tax by determining through back calculations.