Cum-Tax Benefit Available to Religious Society

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal examined the service tax liability of a society engaged in religious and charitable activities that derived rental income from shops constructed within temple premises.

The Tribunal held that, where service tax had not been separately collected from tenants, the gross rental receipts were required to be treated as inclusive of service tax and the benefit of cum-tax valuation had to be extended. 

The Tribunal further held that the ingredients necessary for invoking the extended limitation period and penalty under Section 78 of the Finance Act, 1994 were not established. Consequently, the demand was restricted to the normal limitation period and the matter was remanded for fresh examination of the assessee’s exemption claim under Notification No. 25/2012-Service Tax.